Mortgage reserve account

floss15

Hi, I'm looking for some advice, we were given a reserve when we took out a mortgage with Barclays I actually wasn't sure of the meaning of it as I would have said no, knowing my record with money. But what happened was that we hit financial difficulty and used the reserve to help us out. We are now faced with 5 years to pay it back but because of the interest payments have not been able to pay anything off the balance. What can we do. Is remortgaging the only option we are 51 and 55. 

Hoenir

Extending the mortgage term would seem the best way of tackling this. You'd at least know what your monthly outgoings are and be able to budget accordingly. 

MWT

It is not the only option, but it may be the best option but that depends on a few details.

Hopefully you have been keeping up with the regular repayments on the original mortgage amount so it will only be the reserve that is left to be paid in 5 years time?

How much do you owe for the reserve, and how much do you think your home is worth at the moment?

Also are you both still working (rough annual income would help) , or at least one of you, and what would you plan as a retirement age?

amnblog

If I remember correctly, you cannot swop to a new rate on the reserve account so it is extra expensive. Get a mortgage broker to help you.

MWT

amnblog said:

If I remember correctly, you cannot swop to a new rate on the reserve account so it is extra expensive. Get a mortgage broker to help you.

That is my recollection from when we had a Barclays mortgage, hopefully like ours, this one is an offset mortgage as that would just be at the current rate for the rest of the mortgage, but if not then it gets rather punitive, at Base Rate plus 3.49% I believe.

Clearly a good broker is a great place to start, but if for any reason a normal repayment mortgage isn't possible then one or other form of equity release would be at least possible, but a last option after everything else including down-sizing had been considered.