Interest only

MWT

Marty149 said:

We are both 50 with few months between us ,  hoping to speak to someone soon but current climate it’s difficult, my plan is hopefully to stay in our home , 15 yr mortgage and loot at it again at 60 , hopefully equity release to pay off , weather we could get 95k mortgage, keep back some saving see if that’s possible. 

Just as a rough guide, with the youngest life at 60 you'd be able to take around 30% of the property value as equity release (Lifetime Mortgage). You would have to clear the existing mortgage at the same time but that is what you want to do anyway.

There are restrictions on the type of property that qualifies for equity release, location, condition, adjacencies etc. and taking less than the maximum release possible can help you get a lower interest rate.

I would suggest that you make a plan that doesn't require equity release but it is there as an option to eliminate the mortgage at some point if you decide that is what you want to do.

If you are looking for someone to talk to about equity release at some point, I'd suggest Step Change Financial Services, they are part of the Step Change charity and they make no charge to you for their advice.

Marty149

so for example, I couldn’t take 80/ 100k out of my home on equity release when I’m 60/65 then .. got some savings now but messed up on this mortgage!! so looks like l have to use it all .... looking like we will have to move sack of our future! 

MWT

Marty149 said:

so for example, I couldn’t take 80/ 100k out of my home on equity release when I’m 60/65 then .. got some savings now but messed up on this mortgage!! so looks like l have to use it all .... looking like we will have to move sack of our future! 

Let's assume the house is worth £360k by the time you are 60.

That would mean you could release 30% of that value, which is £108k, from that £108k and with your other savings you would have to be able to completely repay any other existing mortgage.

So if you stick with your current interest only mortgage you would need to use your savings for the difference between the £108k released and the remaining mortgage balance.

Keep in mind these are estimates only and assume your property is suitable for equity release. 

Thrugelmir

Go through your budget , reduce and cut out whatever you can. Use the freed up money to start paying down the mortgage. There's an old Chinese saying. "He who wants to move a mountain starts by moving the smallest stones first".  

gizmo111

I'd talk to a broker about remortgaging - possibly to a part interest only/ part repayment over 20 years to keep the monthly contractual amount to your affordable £530 ish.
Use half your savings to reduce the balance and you still have a decent lump sum in the bank.  
When your £180 loan finishes, use that to overpay the new mortgage, and any other surplus you have at the end of the month.
10 years time you'll be looking at totally different balances on what you owe.

Marty149

Yes we need to speak to a bank , can’t keep beating myself up wasted the last 15 years ! .. hopefully have options like I’ve stressed got to get it right , weather we take 20 yr now then look at it again in10 years  , or pay all our savings off have a lower term !   That’s probably the bottom line of it , decisions need to speak to bank . 

fewcloudy

Marty149 said:

Yes we need to speak to a bank , can’t keep beating myself up wasted the last 15 years ! .. hopefully have options like I’ve stressed got to get it right , weather we take 20 yr now then look at it again in10 years  , or pay all our savings off have a lower term !   That’s probably the bottom line of it , decisions need to speak to bank . 

Not sure why you keep saying 'need to speak to a bank' as if that's your first and only step? That might have been the first step a decade ago or so, to change your mortgage from interest only to repayment... but that ships probably sailed now.

Nevertheless, this is a time for cool heads and some smart thinking, not despair.  As others have said, you are both 50, you have options.

Please re-read the advice already offered to you on here in last 4 days. Then contact a whole of market mortgage broker and take it from there.

kingfisher99

Marty, I have an interest only mortgage that ends later this year. Fortunately I have funds, however, I have contacted my mortgage provider with a view of taking out a repayment mortgage (ie not using my savings). My wife and I have both taken early retirement (64) and are living off my company pension. It looks like we will not be able to get another mortgage due to my low income.  The point of my comment to you is explore all your options now with a view to acting sooner rather than later. With the government in so much debt, its likely interest rates will stay low for some time, but as the debt reduces, so interest rates are likely to rise making any affordability calculations by any lender result in a lower mortgage offer (given your earnings do not rise significantly). Contact a number of different mortgage advisors and see what they say. Before you act, think very carefully about what is being offered - if it looks particularly appealing to you - challenge it, read the small print. ask trusted friends and relatives. Don't find yourself jumping at what seems to be a lifesaving opportunity, only to find you are trapped in something worse than where you are now. If downsizing looks like the only realistic option for you, then you may have to bite the bullet and go down that road (I hope not), but much better that (and be financially sound) than make a costly mistake. I really wish you all the best and hope you make the right decision