remortgage problem???

manager

I am a 62 year old married man in full time employment with a £70,000
interest only mortgage with no endowment to pay this off. When retire in
about 3 years time will Ibe able to pay this off with equity release my home is worth £210,000.

Your advice will be welcome

Roger

Ian_Griffiths_Halifax

No Roger, you'll not be able to get a big enough Equity Release Mortgage to cover that size of mortgage. I don't deal in them so I don't know exactly what you could, but I expect a lot less.

Do you have a Pension Lump Sum coming that could pay it off or reduce it?

Alternatively, you could look at down sizing in retirement and buy a house for cash with what equity you have.

You could even think about taking in a lodger. On a £70,000 mortgage, at 7% the payments would be £408 a month but if you take somebody in at £50 a week it would give you £216 a month towards the mortgage.

UK007BullDog

In 3 years time your house might not be worth what it is now. It could be more, the same or less. I suggest you save as much as you can to repay as much of the mortgage as you possibly can. But if not you might have to look at downsizing. This also depends on your pension and if it can support a mortgage or you might have to continue working.

Also I hope you were advised that over the years you have paid more interest on the loan as it never reduced, compared to a repayment mortgage where every month part of the loan reduced, hence paying less interest on the loan over the years.

To do equity release your mortgage needed to be very small more around £25k, not £70K with a current value of £210K in a falling market.

maidmartha

i have just been reading your answer and im just about to take on an interest only mortgage of 83000 on ten year ficed rate and hope to pay it off with the proceeds of my mothers house its the only way i can find to pay off my partner is this in your eyes a good idea maidmartha

UK007BullDog

Why an interest only mortgage? Is a normal repayment mortgage not affordable for you? Have you thought of splitting the mortgage, one part interest only and one part repayment?

If you know that you will get that property from your mum and you are also 100% sure there are no secured loans, a mortgage or other siblings vying for their share, then yes you could do it but its always a risk: property value falls and also you pay more interest in the long run as the debt never reduces.

luckyfool

You should also consider the possibility her needing the equity in her house, e.g. to pay for long term care? Not sure if that is a possibility but if so you should take it into account.