Remortgaging 20 year old interest only

WJB1976

Hi all,

We’re currently trying to remortgage our home and would really appreciate any advice from anyone who has been in a similar situation.

Our current mortgage has been interest-only for around 20 years. We’re now looking to remortgage at around 65% LTV.

The difficulty we’re facing is that we recently started our own business, so we don’t yet have the full set of accounts that most lenders require. The business is performing well and income is improving, but it’s too new to satisfy many lenders.

We also have some unsecured loans, but all payments (mortgage and credit) are up to date and we’ve never been in arrears.

We approached our current lender to see if they could extend the current arrangement temporarily while the business becomes more established, but they’ve said they can’t help.

Has anyone successfully remortgaged in a similar situation with a new business?

Are there lenders or brokers who specialise in cases like this, or other options we should consider?

Thanks in advance for any guidance.

ACG

In a word no.

There were self cert mortgages, but they were put to bed following the world going to pot in 2007/8.

Since then I only know of 1-2 lenders who can look at a mortgage prior to submitting 1 years accounts. But they would only consider you after 10 months and would not allow you to complete until you have the accounts for the full year.

Your going to have to wait until you have been trading for the full year.

silvercar

what was the original plan to pay off the mortgage. I know interest only mortgages were popular 20 years ago (I have one) but they generally required a method of repayment to be given. I know my lender has been writing to me annually in the last few years asking for details of repayment method.

MWT

https://forums.moneysavingexpert.com/discussion/6657935/remortgaging-20-year-old-interest-only

The business is performing well and income is improving

When did you start the business?

When you talk about 'income' is that revenue or profit? … just wondering if the first year accounts are going to support the sort of mortgage you need even if you manage to wait long enough to complete that year?

Can't think of any alternatives unfortunately, unless there are any options to use your planned repayment vehicle instead of a new mortgage…

freesha

So what was your original plan to pay off the capital?

MWT

https://forums.moneysavingexpert.com/discussion/comment/81911610#Comment_81911610

While it is a fair question, and has been referenced a few times now, we also need to keep in mind that in 2006 self-certified mortgages were a popular choice for those who were self-employed or had variable unconventional income streams and that it was not uncommon to use sale of the house as the repayment method.

There is a well set out Ombudsman review of a case from that time period that may help put things in context:

https://www.financial-ombudsman.org.uk/decision/DRN2731398.pdf

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81911792#Comment_81911792

Interesting reading this ombudsman case.

I have no doubt the antics of Mr and Mrs Smith in that case ( living way beyond their means) in obtaining their interest only mortgage and their subsequent 'buyers remorse' when eventually realising the consequences of having made zero provision to pay off the capital, is all too typical of many who self certified for mortgages in the 'good old days'. Pleading to the ombudsman that they were mis sold the interest only mortgage, was quite rightly rejected in that case.

The OP would do well to consider, whether an interest only mortgage really serves their long term interests, or merely kicks the makings of a pre existing financial crunch, further down the road.

saajan_12

Why do you want to remortgage - is the current term coming to an end or do you want to lower the interest rate and/or start paying down?

How recent is recent for your business? If its under 1 year I think its unlikely, as a few months profit could just be a temporary burst, possibly before some expenses come in. If longer than 1 year, you might try a broker to suggest lenders.

silvercar

I know some people were thinking that downsizing would clear the mortgage, but kids these days seems to boomerang back home. So in 2006 you may have thought your angelic toddler would have flown the nest in 20+ years time, now it looks like they are enjoying family living. Also people are living longer, so any expected inheritance may not yet have come to fruition, and even them may be swallowed by care fees. 20 years is a long time to forecast ahead, though lump sums from pension is still an option.

BikingBud

https://forums.moneysavingexpert.com/discussion/comment/81912289#Comment_81912289

But surely downsizing to release equity in order to pay off the loan and purchase another smaller property would indicate that a LTV of much better than 65% had been achieved?

poseidon1

Perhaps time to wind up this thread.

The OP's track record as a 'one post wonder', does not suggest he is particularly keen to engage constructively with the queries he raises.