Any tips on my situation please?

Beatle_Ray

Hi All, i currently have a mortgage with the Halifax, its on a 2 year deal with 13 months left to run on that deal and ten years left on the mortgage itself, the property is worth £400K and the outstanding amount is £105K, i have just finished a three month holiday payment term, when i organised this the rep at the Halifax offered me to convert the mortgage to a pension based one for the next 22 years, i'll be 80 then, i wasn't too keen then but the reason for taking the holiday period was that the business had taken a hit and my income has been going steadily downwards this past year and the pension mortgage has now more appealing as the payment is only £533 not the £927 it was before the payment holiday, i can meet the payment of £533, that will help short term, i have almost resigned myself to selling the house but not just yet so my questions are when i call the Halifax and tbh i'm not looking forward to it is there anything i should say/avoid saying and once they have offered it could they then refuse to do it and also what evidence do they need of the pension which is a private one currently worth about £60K with a payment of £100 pm, comments please and appreciated in advance,

MWT

You certainly should talk to a broker about this, but at first glance this doesn't seem to make much sense...

If you are 58 now, with a £60k pension fund only getting £1200 a year invested, it doesn't seem likely that you'll be paying off the £105k from your pension fund, nor possibly are you going to be able to continue the payments into the pension plan if the business is declining...

You do have other options possibly including Equity Release but you need some advice from someone with full access to your financial information and your own realistic projections on your likely business performance over the period from now to your planned retirement date...

... and if you do contemplate selling the property in the not too distant future I'd forget equity release and just down-size perhaps a little earlier than planned...

getmore4less

Even if bother were repayment.  given a 25% LTV this second option looks expensive.
£105k  10 years £927pm is a rate of around 1.25%
£105k  22 years £533pm is a rate of around 2.80%
I would be looking closely at what the the £533pm is paying for

if interest only that is over 6%

Beatle_Ray

Thanks for the response so far but i was looking for a quick and cheap solution, i only see myself staying here for at the most the next 18 months and then down sizing, its just getting through the next six months really, are there any other options to consider, i was thinking of taking the pension offer then selling the property and paying off the mortgage completely, i appreciate there will be a fee for doing so but its the next few months that worry me

[Deleted User]

Is the 'pension mortgage' another way of saying 'interest only'?  If so why is the rate so high?  

Do you have any sort of proveable income to allow a remortgage?  Plenty lenders will allow Downsizing as a legitimate repayment vehicle and rates would be around 2% which would give you a payment of £175/m 

Equity Release probably isnt the right idea but if the alternative is Halifax doing interest only at over 6% then it might be worth looking in to.   Rates are a lot lower than that but with exit penalties

Thrugelmir

Are you understanding correctly? A pension mortgage seems somewhat unlikely. 

K_S

Beatle_Ray said:

Hi All, i currently have a mortgage with the Halifax, its on a 2 year deal with 13 months left to run on that deal and ten years left on the mortgage itself, the property is worth £400K and the outstanding amount is £105K, i have just finished a three month holiday payment term, when i organised this the rep at the Halifax offered me to convert the mortgage to a pension based one for the next 22 years, i'll be 80 then, i wasn't too keen then but the reason for taking the holiday period was that the business had taken a hit and my income has been going steadily downwards this past year and the pension mortgage has now more appealing as the payment is only £533 not the £927 it was before the payment holiday, i can meet the payment of £533, that will help short term, i have almost resigned myself to selling the house but not just yet so my questions are when i call the Halifax and tbh i'm not looking forward to it is there anything i should say/avoid saying and once they have offered it could they then refuse to do it and also what evidence do they need of the pension which is a private one currently worth about £60K with a payment of £100 pm, comments please and appreciated in advance,

@beatle_ray From what I can understand Halifax probably said they could go up to 80 years of age (lending into retirement) if you could evidence a pension that meets affordability requirements. With a pension projection of £100/month, that's not likely to happen.

As JMA said, if your plan is to downsize and it is plausible, you may have other interest-only options. The LTV is very low so that will play in your favour.