Remortgaging to get more money to fund home improvements and pay off debts 18 March at 3:06PM in Mortgages & endowments 5 replies 353 views

Good_Money

The fixed rate on my repayment mortgage expires in December.

Current mortgage balance is around £60k. (I pay about £380 per month)
House value approx £450k.

Credit card debt (on 0% rate) about £8k
Loan (2.9%) about £3k

I am 53 now and current mortgage goes on until I am 70.

I have some jobs that need doing in the home but do not really have cash spare - Boiler and heating upgrade, General decorating etc

I am thinking of asking to borrow an extra £20k, but to keep mortgage payments down I was hoping to go to an Interest Only Mortgage for a couple of years and then review again when I am over 55.

Current pension pot is around £200k

Are there banks / building societies that would do this or is this a bad idea? Does anyone have any thoughts?

MFWannabe

Sounds like a bad idea to me to go interest only 
What are your other options? 

How desperate is the work you say is required? 

Can it wait until you’re 55 and you could take a percentage of your pension tax free? 

If desperate are you not able to get a loan to cover it? 

gizmo111

If you use the mortgage to consolidate your debts then the money you have been using to pay the loan and card will make the difference in the mortgage increase.  Although never a good idea to turn unsecured debt into secured. 

bluedove

The only ways you can go interest only, is....

If you are a high net worth individual, on income of atleast £150k p/a. 
OR

You have a credible repayment strategy. 

Bluebell1000

You would end up paying higher interest on the credit card balance and loan by putting it onto the mortgage, assuming that you can clear the card in the interest free period. Have you considered visiting the debt free wannabe board to look at other options that you might have?

MWT

Bluebell1000 said:

...Have you considered visiting the debt free wannabe board to look at other options that you might have?

I would second that suggestion.

It isn't as impossible to get an interest only mortgage as some might suggest, but it does have to be matched by a solid plan to settle the debt and shifting between interest only and repayment without getting deeper into trouble isn't easy or 'safe'.

Planning on accessing the pension fund isn't usually an acceptable exit plan with lenders these days, nor is is wise to plan on reducing your income in retirement from the pension fund by up to a quarter unless the fund is very large (which yours isn't) or if you perhaps have other significant pension funds in place, which seems unlikely from what you have said so far...

Better to get some help looking at other ways to achieve your short term goals without taking on significant risk...