Repayment Mortgage Vs IO + Pension

superjuz

MWT said:

superjuz said:

MWT said:

See if any of the brokers here have additional comments, but it is fortunate that you are currently with Santander as they are probably one of the easier lenders to get an IO product from, and no, potential inheritance isn't a vehicle you can use, but since you have now mentioned your wife and her earnings, along with 'a decent amount of equity' that should help.

Talk to your lender and see what they say, just be careful to keep a close eye on your pension fund growth and the rules around the lump-sum withdrawal as there is a lot of time between now and when you will be able to do that and things can and do change...

You should also consider taking financial advice since you are committing a significant portion of your pension fund to cover the mortgage so well worth making sure that doesn't leave you wanting in another 20-30 years...

Thank you, your time and replies are very much appreciated

I just took a look at the Santander Intermediaries information (easy to Google for it...) and they do not accept pensions as a repayment vehicle, but they do accept sale of the property, so you may want to consider how you present your plans when you talk to them...

Fantastic, thank you! I'll tell them we''ll downsize.

superjuz

dimbo61 said:

Good luck  with getting a residential Interest only mortgage 

Difficult?

MWT

Residential Interest-only mortgages have been difficult to obtain for some years now, due in no small part to how much they were abused 20 years ago, and the legacy of the 'self-certified' mortgages which often resulted in the 'mortgage prisoners' we see here from time to time...

Many lenders imposed high minimum salary limits and minimum equity positions along with relatively high minimum loan amounts.

It is often said (but not entirely true) that you can only get IO if you don't need it...

IO for buy-to-let as a commercial mortgage is perfectly normal though and simply expects the repayment to be from the sale of the property.

You didn't say if you obtained your current mortgage directly or through an intermediary, but if you do need to look elsewhere I would strongly suggest talking to a broker.

superjuz

My gut feeling was that IO mortgages would be increasingly popular over the next few years with the interest rate and energy cost rises. ( I still can't believe the BOE are attributing the double digit inflation we're seeing to a surplus of cash - but that's a discussion for another day.)

I fear for many it will be a choice of IO - or handing back the keys.

MWT

superjuz said:

I fear for many it will be a choice of IO - or handing back the keys.

Outside of short 'holiday' periods, IO will not be an option for most residential borrowers with most lenders as it just delays the inevitable...

Ksw3

I would go for repayment mortgage personally, it would make it a commitment that I would have to keep. Who knows what might happen in the future, kids, caring for elderly relatives,  it then becomes very easy to say oh ill drop down a % on my pension contributions just for a few months.... I'll up it again next week, next month, next year...

dimbo61

As MWT has already explained most  Lenders don't do Interest Only mortgages for residential properties.
The whole mortgage market has again changed in the last 15 months and mortgages are harder to get.
Like most things in life shop round and speak to a broker 

dimbo61

As MWT has already explained most  Lenders don't do Interest Only mortgages for residential properties.
The whole mortgage market has again changed in the last 15 months and mortgages are harder to get.
Like most things in life shop round and speak to a broker 

amnblog

superjuz said:

Santander, my current lender, do seem to be offering an I/O switch almost at the click of a button. 

You cannot use a pension as repayment vehicle with Santander and your property would need to be worth £415,000 minimum.

superjuz

Really appreciative of the replies, thank you. I had no idea IO mortgages were as good as obsolete on a residential properties.