Not able to repay the capital on Interest only mortgage

andycov30

I live in  a house i got a mortgage for 15 years ago .It is an interest only mortgage and the term has ended and I have no means of repaying the mortgage.I have bipolar, PTSD and GAD and am in receipt of PIP and ESA with the severe disabled premium.The house has approximately 100K of equity  , an outstanding balance of 160k and I am 57 .So far the Halifax have allowed me to stay here paying the usual monthly interest only payments .I receive mortgage interest support through SMI , although this is limited due to the interest rate being high on the mortgage .I am not able to obtain a mortgage because I have a very bad credit rating and don't have enough income to pay a mortgage.At some point I know the Halifax will have to ask me to leave , which would mean having to sell my house (I really do not want to do this) .Are there any options , other than selling my home ? 

MWT

Sorry to hear the situation you are in.

Could I just ask, re the equity in the house, are you saying the house is worth around £260k so you have £100k equity after the mortgage, or is there another charge on the house as well?

MWT

Whatever the answer to my question though, it feels like you should be talking to 'Shelter' or possibly 'StepChange', but see what others have to suggest first...

tacpot12

I think that selling your home might be the best option for you. You are right that eventually Halifax will force you out. This is going to be distressing and you may receive a lot less than £100K if the property sale is forced. To my mind, it would be better to be proactive in selling the house. 

Can you buy a flat or apartment in your area for around £100K? If not, you may have to start renting somewhere. Renting from a good landlord, can make life much easier as the landlord deals with all the repairs to the property. I would recommend a Housing Association or Council property over one from a private landlord. 

If you sell the property and receive about £100K, and cannot buy in your area for that price, you might consider moving further afield so you can buy. You would have six months to complete the purchase of a property - which basically means you need to find something yo buy before selling your house as it can take 6 months at present for house sales to go through.

Not spending the money on a house will result in you losing your ESA because you have more that £16,000 of savings. While this might seem like a big loss, you will not have a mortgage to pay, and the £100K will cover your rent for about 15 years. If you are not receiving ESA, you will also not receive the NI credits that help build up your State Pension entitlement, however, you can pay voluntary NI contributions and these will cost about £2,500. This will only reduce the £100K very slightly, and the benefit could be substantial. Before making any voluntary payments you should check that doing so will actually increase your state pension entitlement.  

I am curious as to what happened to the original plan to pay off the mortgage when the term ended?

Thrugelmir

Be prepared to sell. Halifax will eventually seek repayment or repossession. Better to do it on your terms. 

csgohan4

Thrugelmir said:

Be prepared to sell. Halifax will eventually seek repayment or repossession. Better to do it on your terms. 

Op the costs for repossession will be significant, best to sell it on your terms and reduce your costs. As Above engage shelter to help with your debt 

maisie_cat

We had a similar problem, although we were aware of it for years and planned for what we'd do. Our only option was to move further afield, 250 miles in our case, in order to afford a home without a mortgage that fitted our needs. We could have stayed and moved from a house to a small house or flat, but we've very glad that we took the option of a new start.

yksi

You definitely want to arrange the sale yourself. It can then be a standard sale - if Halifax takes charge it will probably be an auction which will drive down the price further. Try to see that you have some power here if you act now, you will retain a good chunk of investment and have some control over how it is spent.