No provision for Interest Only

Geneygene

I had to switch my mortgage to interest only when I lost my business in the credit crunch 2009 and have never earned enough again since to go back to repayment. I now only have 12 years left and do not have sufficient provision to pay it off. Are there any suggestions to my options? I can’t remortgage either due to income levels now. Will the mortgage company force me to sell or is there something I can plan for? 

dunstonh

Are there any suggestions to my options? 

in no particular order
1 - sell it and move to rented
2 - sell it and downside to smaller
3 - subject to your age now (or near future) - switch to equity release.
4 - find a sugar daddy/mummy!!

Will the mortgage company force me to sell or is there something I can plan for? 

Yes.  They will encourage you to sell it and ultimately repossess it if you fail to.

ACG

Can you overpay? 

You may not be able to clear the balance completely in 12 years, but if you have say £20k outstanding and you are clearing it at £5k a year, they might be prepared to just let it ride for the extra 4 years. 

Geneygene

Thanks for taking the time to reply. Sugar daddy not an option as I think my husband would be sad ! Don’t want to sell, and not sure equity release would work. I’m 53 and LTV is about 75% ish on 1st. There’s then a 2nd charge placed by business bank in 2009. Need me a little lottery win it seems. I say little ….

MWT

Geneygene said:

...Don’t want to sell, and not sure equity release would work. I’m 53 and LTV is about 75% ish on 1st. There’s then a 2nd charge placed by business bank in 2009. Need me a little lottery win it seems. I say little ….

A combination of paying down as much as you can over the next 12 years and equity release may work though...

As long as your husband is at least the same age, in 12 years time you could be accessing around 30% of the value through equity release if the lending conditions are similar to now...

A lot depends on how much you can afford to reduce the balance by over the next 12 years and the size of that 2nd charge as you will not be able to get equity release with that still in place...

Also if seriously considering equity release you need to check if your property is generally suitable as the lenders can be quite picky...

Geneygene

I’ve been trying to save for the last 6 years and the plan was to save to pay the mortgage off. However due to various circumstances here and there, the savings are now being dipped into each month to get by. It’s all a bit messy, I owe a lot, I have a bit in the bank but currently insufficient coming in. I’m 53, husband is 50 (I know get me with a toy boy!) we need to sort pensions out also and although I’m a bit knowledgeable on financial matters, I seem to be stuck in a rut but want to prepare best I can. 

penners324

Unfortunately downsizing may be your only option.

Geneygene

Thankyou for taking the time to reply. It’s much appreciated. 

silvercar

MWT said:

Geneygene said:

...Don’t want to sell, and not sure equity release would work. I’m 53 and LTV is about 75% ish on 1st. There’s then a 2nd charge placed by business bank in 2009. Need me a little lottery win it seems. I say little ….

A combination of paying down as much as you can over the next 12 years and equity release may work though...

As long as your husband is at least the same age, in 12 years time you could be accessing around 30% of the value through equity release if the lending conditions are similar to now...

A lot depends on how much you can afford to reduce the balance by over the next 12 years and the size of that 2nd charge as you will not be able to get equity release with that still in place...

Also if seriously considering equity release you need to check if your property is generally suitable as the lenders can be quite picky...

This is relevant, if you hope to have an opportunity to equity release in the future, it is important to work on reducing the 2nd charge. So when you do have spare cash, it is important that it goes on the 2nd charge and not the main mortgage. 

Geneygene

Thanks - the second charge is a Charging order. My then business partner went bankrupt when we lost the business and I chose not to (just morally for me it didn’t sit right) and as we were joint and several with a PG they went for the charging order. I’ve made them a couple of offers as short settlement (to be fair it was quite a low ball but was best I could do) and they have rejected, which I understand. But now I’m
glad they did reject as I’m
having to now use that money until things improve some. 

Brie

You might want to try the dealing with debt forum to see what might be revealed when you fill in a statement of accounts.  The friendly people there may find ways for you to afford to throw a bit more at the outstanding amount to make a solution in the future more likely.