Possibly a stupid Q about mortgages…

[SoRad]

we bought our house for £220,009 9 yrs ago, we have £140,000 left on the mortgage.

Going by recent sales in the area our house could potentially be worth approx £350,000.

So quite a bit of equity.

We’re struggling to pay our mortgage due to dh not working due to injury.

Is it possible to release this equity to pay off the mortgage? or does it not work like that?!

No it doesn’t. If you borrow an additional £140k to pay off the existing £140k, you’ll still owe £140k.
the only way releasing equity works is if you sell your house & buy a cheaper home so needing to borrow less.

You could extend the term to make it a bit cheaper but you’ll pay more in the long run. You could explore going interest only or part internet only if your mortgage provider allows it. Again it’ll cost you more in the long run.

there are 2 ways to release equity: Sell the house and buy somewhere smaller with just the equity. Or borrow more money which means you’ll have a bigger mortgage

You can release it by selling the house, paying off the mortgage and using the equity you have left to buy something smaller.

If you don’t sell the house though all you can do to use the equity is to borrow money using your house as security…in other words by taking out another mortgage!

If you sold for 350 you would repay your mortgage of 140 and have released your equity and have 200 ish in the bank.

You could now buy a place for a cost of up to 200 and be mortgage free.

Okay. Thank you.

We might have to sell 😩

Remember that selling will be expensive in and of itself.

Are you still working? If so you might be better to remortgage to extend the term so that monthly repayments are smaller, meaning that you can afford them without your husbands salary.

Before you do that it is worth exploring whether you took and life insurance out when you took the mortgage. It is common for this to be necessary, and for it to include some critical illness cover which could be a huge help here.

@SoRad

I'm sorry to hear about DH. Will he be able to return to work? Train to do something else? Are you due any insurance pay out/compensation??

take a deep breath. There are other options (go interest only/extend your mortgage). Speak to your mortgage lender see what they suggest.

unless you can get something that's suitable for you, without a mortgage or only a very small one, selling up is not likely to be the best option. Going into rental would be a bad move.

don't forget there will be ERC as well.

let us know how you get on.

Only by remortgaging, which would increase your outgoings. Do you have invalidity or critical illness insurance?

Is the house big enough to get a lodger?

We did manage to do this, sort of - by shifting our mortgage to a different provider, with a much better loan-to-value ratio than we’d had initially because the value of the house had increased. So we were paying less overall. Would that help?

Much depends on whether his problems are long or short term and whether you can earn more. If earnings will go up then remortgaging over a much longer term or going interest only could be a good option. Speak to a broker so you can get realistic costings. London and Country would give you an idea without charging you.

Thank you everyone. We’ve been given 2 interim payments so far which is currently paying the mortgage, but doubt we’ll get another one and we have no idea when or how much the final settlement will be!

I can’t pay everything on my wage unfortunately.

Family home so no room for a lodger.

I’ll have a look at extending the mortgage. Thank you