Short Term Mortgage

frankfish

Morning

Looking to help buy a house for our son, will need to borrow £35K - £40K for a few years until I retire and use some of the 25% tax free lump sum

Is a Retirement Interest Only the best option ? Can it be repaid in full after 3 years ?

Any recommendation on Building Societies that offer these and typical rates ?

We own our own home worth around £275k, I still work salary of £50k plus a small pension of £8k, Mrs Fish does not work.

Thanks

MWT

https://forums.moneysavingexpert.com/discussion/6683486/short-term-mortgage

No, a RIO product is not suited for short term borrowing due to the typical early repayment charges and interest rates.

You should have options for a normal mortgage and if it really is only a few years (3-5?) then you might consider a fixed term product to remove the risks of further interest rate increases.

Are you concerned about making the payments on a normal repayment mortgage?

frankfish

Thanks - not concerned about missing payments , would go for a fixed rate , but can this be done using a normal mortgage to get the required funds ?

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82138382#Comment_82138382

From a past post I gather you are around age 60, so absolutely no problem you getting a fixed rate repayment mortgage for the modest amount you are seeking to borrow.

I got a £55k repayment mortgage from Barclays at age 66 solely on state pension only, you are still working so in a better position. Only issue for you is how long to fix the mortgage to avoid early redemption penalties when you wish to pay off early.

Alternatively, consider letting the mortgage run the term and keep your 25% tax free cash in reserve producing tax free ISA income to help fund the ongoing mortgage payments until state pensions kick in.

You do have different options here, and squandering your pension tax free cash in the way you plan might not be optimal.

silvercar

Another option would be for your son to take (more of) a mortgage. You could then gift him a lump sum to repay (part of) it when you get your pension lump sum. If his income isn't enough you could look at sole proprietor, joint borrower mortgages.

kingstreet

https://forums.moneysavingexpert.com/discussion/6683486/short-term-mortgage

On your RIO question, this is usually based only on retirement income and not on current employment income and is therefore likely to be unsuitable.