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  • FIRST POST
    • pumpman60
    • By pumpman60 10th Jan 18, 3:51 PM
    • 6Posts
    • 0Thanks
    pumpman60
    asset rich cash poor
    • #1
    • 10th Jan 18, 3:51 PM
    asset rich cash poor 10th Jan 18 at 3:51 PM
    Can anyone help? I have a property worth £220,000 . I have an interest free mortgage in 3 parts , 1 part of £20,000, needs repaying in 2019, the other parts 2029. I have debts of £50,000 accumulated over the years. I am 68 years old. My wife and I have pensions totalling £25500 pa. Mine total £19500pa. 90% if our money goes on repayment of debt. The banks TSB and Clydesdale refuse any solution. basically I would like to pay of my debts and pt 1 of my mortgage and stay in my existing property. So £70,000 would be ideal. That would leave a total debt of £130,000 if I died. Easily repayed by selling our house as neither could upkeep it ,maintenance wise, on our own. Is there any way that this can be achieved and if so how and who with. I have enquired about equity release and they say I have to pay the mortgage off first? Any advice would be appreciated. We do not want to shirk our debt just pay it! We live in Scotland, Thank You
Page 1
    • marliepanda
    • By marliepanda 10th Jan 18, 4:17 PM
    • 5,928 Posts
    • 12,582 Thanks
    marliepanda
    • #2
    • 10th Jan 18, 4:17 PM
    • #2
    • 10th Jan 18, 4:17 PM
    You say asset rich, where are your assets? A house with a mortgage (are you sure it!!!8217;s all on interest free?) isn!!!8217;t usually something that would make you !!!8216;assert rich!!!8217;

    How much is owed on your mortgage?
    • enjoyyourshoes
    • By enjoyyourshoes 10th Jan 18, 4:29 PM
    • 1,061 Posts
    • 1,302 Thanks
    enjoyyourshoes
    • #3
    • 10th Jan 18, 4:29 PM
    • #3
    • 10th Jan 18, 4:29 PM
    Mortgage I guess should read 'interest only' ?
    Can you not rationalise your outgoing, only purchase NEEDS and ditch the WANTS?

    This monies can go against reducing your debt.?

    Do cash flow with all your debts and calculate how much to which debt produces the 'best' result too eradicate your debts?

    Prioritise in APR order, pay highest first.

    Also calculate how much your OD is costing you, if you have OD.

    Any tax free lump sum with he pension, if so use this to pay off debts.
    Debt is a symptom, solve the problem.
    • lotteryman
    • By lotteryman 10th Jan 18, 4:38 PM
    • 47 Posts
    • 39 Thanks
    lotteryman
    • #4
    • 10th Jan 18, 4:38 PM
    • #4
    • 10th Jan 18, 4:38 PM
    Not clear on what you owe on the property.
    You say you have to pay £20k in 2019 and talk about parts 2 & 3 but not amounts.
    You need to look at how much 'equity' you have i.e. how much of the £220k you say your house is worth is 'surplus' i.e. if you add parts 1, 2 &3 together and subtract it from £220k how much extra is there. How accurate is you valuation of the property?

    Trying to raise that amount of capital may only be possible if you have sufficient equity and downsize.

    It that what you are needing to do is raise £20k for the 2019 payment?
    If what I've understood is correct, you say 90% of your income goes on paying off debt - that's a lot of money (around £2k a month).

    As you have a £19k pension, you will be paying tax on it and your wife won't be paying tax on her's. Have you elected for the married couple's allowance given by the tax system. This allows you to transfer some of you wife's personal allowance to you. It will save you a bit (but not much in terms of your debt) - just go to HMRC - it is really easy to do.

    I would suggest the first thing you need to look at where your £50k of debt is and look at restructuring it looking for better rates and longer payment periods.

    i would also suggest that you go to Citizens Advice and get an appointment with a debt counselor who will be able to give you better advice. Also look at the money advice service https://www.moneyadviceservice.org.uk/en/tools/debt-advice-locator which tells you where you can get free advice

    Also look for roadshows that Martin Lewis often does ans see if you can get advice from there.

    BTW, even if you had paid off your mortgage, equity release is often a poor solution and big companies are set to make £billions from it over the years.
    Last edited by lotteryman; 10-01-2018 at 4:47 PM.
    • -taff
    • By -taff 10th Jan 18, 5:41 PM
    • 7,420 Posts
    • 5,493 Thanks
    -taff
    • #5
    • 10th Jan 18, 5:41 PM
    • #5
    • 10th Jan 18, 5:41 PM
    How much of yor debt is mortgage debt, how much is unsecured, do you own the property as joint tenants and is most of the debt in your name?

    If the answers are not much, most of it and yes and yes, you might want to think about a DMP.
    That way, your interest is frozen [hopefully by all companies] , you get a much lower monthly payment [ except for the mortgage] and if you were to die, your wife could keep the house [or sell it]

    Phone Stepchange or look on their website
    • pumpman60
    • By pumpman60 11th Jan 18, 8:56 PM
    • 6 Posts
    • 0 Thanks
    pumpman60
    • #6
    • 11th Jan 18, 8:56 PM
    • #6
    • 11th Jan 18, 8:56 PM
    Sorry folks , its Interest only I have . My mortgage is made up of 3 separate ones taken out over the years to finance house improvements. My total commitment mortgage wise is £80,000. The 1st part due for repayment is £20000 in 2019. The other 2 parts , £30000 each, are due for repayment 2029. The reason I don't want to move is I will not have enough left to purchase a property . At the moment my mortgage payments are £170 a month, rental starts at £700pm.
    Does anyone know if a 12 year interest only mortgage for £70,000 is available anywhere? This also would suffice until I am 80 and my other parts of my mortgage are due and I would definitely have to move then, if I was still in the land of the living!. Thanks so far.
    • enthusiasticsaver
    • By enthusiasticsaver 11th Jan 18, 9:49 PM
    • 6,619 Posts
    • 13,923 Thanks
    enthusiasticsaver
    • #7
    • 11th Jan 18, 9:49 PM
    • #7
    • 11th Jan 18, 9:49 PM
    As you get older your options for mortgages are much less as lenders tend not to loan past the age of 70. It looks like you are asking to borrow £70k to repay the £20k mortgage due in 2019 and other debts totalling £50k? You already have a further £60k mortgage on the property though so £130k on interest only with borrowers in retirement is unlikely to be agreed. £130k mortgage on an income of £25k is way over most income multipliers as well. I am also not sure how either of you would service that debt should one of you die and the pension income reduces.

    I think at some point you and your wife are going to have to address this so it may as well be now as in 12 years time especially if 90% of your income is going on debt repayment. I am not sure what the equivalent in Scotland is but you may have to consider the Scottish equivalent of bankruptcy or DMP but the difficulty you have is although £50k of your debt is unsecured £80k is secured on your home.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • pennystretcher
    • By pennystretcher 12th Jan 18, 11:59 AM
    • 389 Posts
    • 1,449 Thanks
    pennystretcher
    • #8
    • 12th Jan 18, 11:59 AM
    • #8
    • 12th Jan 18, 11:59 AM
    Check your credit score, and explore the option of remortgaging first. If that is not an option, you could consider downsizing. Or in the interim, can you take a lodger in one of your bedrooms to give you bit of extra income?
    Mortgage free
    • indesisiv
    • By indesisiv 12th Jan 18, 12:07 PM
    • 5,815 Posts
    • 19,122 Thanks
    indesisiv
    • #9
    • 12th Jan 18, 12:07 PM
    • #9
    • 12th Jan 18, 12:07 PM
    What mechanism do you have to pay back the capital of the interest only mortgages?
    Is it only the sale of your house?

    I think you are going to be struggling to get a mortgage that large at your age with the outstanding debt and your incomes.
    “Time is intended to be spent, not saved” - Alfred Wainwright

    Costa Rica & England in the MSE World Cup Sweepstake
    • lotteryman
    • By lotteryman 12th Jan 18, 4:29 PM
    • 47 Posts
    • 39 Thanks
    lotteryman
    I am afraid that you may be putting off the inevitable.
    You say that you don't want to sell as you mortgage is £170pm but rent is £700. A few rough calculations mean that your current income is around £2000 per month which means, after living expenses; gas, elect etc. a lot is going on servicing debt.
    You have realised that you have an impending issue with raising £20k next year to pay off the first stage of the mortgage. Unless you are able to do this, and given your level of debt, you may get to a point where the mortgage providers force you to forfeit the property and repossess. If they do this you will not get anything like what you have currently in equity.
    If you sell and pay off all your current debt you will have a not insignificant sum of money (£120k - £80k (mortgage) - £50k (other debt) - expenses) so around £70+k .
    This will also free up your monthly outgoings to just living costs (as you will have paid off debt and no mortgage) so you should easily cover £700pm rent and have some to spare. You will also have £70k to enjoy your life rather than worry about debt.
    Obviously there are several caveats to all this but I would suggest you talk to one of the free financial advice/debt charities whose professionals will give you proper advice knowing your full circumstance.
    • pumpman60
    • By pumpman60 12th Jan 18, 4:43 PM
    • 6 Posts
    • 0 Thanks
    pumpman60
    Thank you all for your advice , I will look at all options . What is annoying though is the obvious Age Discrimination that is being applied to a mortgage. Our pensions will always be paid and not reduce as they are government and forces pensions. If we were to die then the property would be sold and the mortgage repaid as the value of the property far exceeds the mortgage and interest for the amount required. If I were a 40 year old looking for a 12 year , £70000 deal , I would have my hand snatched off to sign, even though employment nowadays is not guaranteed , but my income is. I will however take your advice , thank you.
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