paying off mortgage

infopension

I have an interest only mortgage and only three years to pay it off, I have an agreement that I can pay off as much as I want and my mortgage is small only £ 44.000, I can only work part time now and have just recently got a job to try and pay it off at the end of term, but not sure if I can do this can i be forced out of my home or is my morgage company obliged to increase my term if I cannot pay

MWT

infopension said:

... can i be forced out of my home or is my morgage company obliged to increase my term if I cannot pay

Short answer is 'yes', you can be forced to sell the property as you are obliged to repay the mortgage at the end of the term, or sell the property and keep the balance of the sale price after settling the mortgage and any associated costs... The lender is not obliged to extend the term and in most cases on an interest only product they will not be willing to do that.

There are other options though depending on your age, property value and income, so not give up hope at this point.

What is the property currently worth, and how much do you think is likely to be outstanding at the end of the term?

How old will you be at the end of the term and do you own the property on your own or is there someone else on the deeds or living with you?

infopension

Hello
This is what I thought. However I still have three years to pay off and returning to work to try and do so. 

My property is worth £ 350,000 my outstanding owing is  £ 44,000
 I am nearly 66 now so 69 at end of term
Just me on the deeds and I do not want equity release

MWT

Given those numbers, although you may not want equity release it will remain as a safety net for you (subject to suitability of property/location etc.)

Hopefully you will not need it, but £1200 a month for the next 3 years is a not insignificant level of repayment to achieve so always good to know you are not without an alternative.

jimjames

infopension said:

My property is worth £ 350,000 my outstanding owing is  £ 44,000
 I am nearly 66 now so 69 at end of term

With those numbers could you sell and get a property worth £300k? Mortgage is then clear.

kingstreet

When you say "equity "release" presumably you mean interest-roll up.

What about another interest-only mortgage? Income sufficient to continue monthly mortgage payments in retirement?

MWT

kingstreet said:

When you say "equity "release" presumably you mean interest-roll up.

Also worth considering that the borrower doesn't have to let the interest roll-up, it can be a good way to deal with a situation where the post-retirement income doesn't meet the affordability requirements for a RIO product but the borrower needs a lump sum which they would wish to repay over the next few years as they are able...

Not hard to find products offering say, up to 10% repayment per year with no penalties and descending ERC reaching zero after 10 years.