Has anyone taken out a part interest-only mortgage after divorce?

[DaydreamBeliever72]

Hi,

Coming to the end of my divorce process and we will be putting the family home on the market in a few weeks (after Christmas). I am trying to figure out how I will get a mortgage for property prices where I want/need to be. I’m 51, and almost 52 so time isn’t on my hands when looking at mortgages. I’m set to get around £130k from the family home. Houses I am looking at are about £250k. I don’t want to end up paying all of my disposable income on a mortgage as I’d end up with nothing to live on (and have some enjoyment). I also don’t want to be able to struggle to pay if house maintenance bills or car bills crop up.

My divorce fees have cost me £13k so far, which I need to pay back and I haven’t taken things to court as I’m undergoing a huge amount of stress in my work life as well as in my personal life. I am also not receiving any child support from the father (I have a child under 16 still with me 95% of the time). He has said he can’t afford to pay.

I’m looking at my pension in greater detail (NHS) and it looks like I will benefit from the McCloud ruling on my 1995 pension so will get a bigger pension and lump sum (not included in the divorce settlement as we have both agreed not to touch each others pension). I can get this lump sum at 60.

I am wondering, therefore, if I can get the house I want and pay a part interest only/part repayment mortgage to keep the monthly payments down. I’d then pay it off with my pension lump sum at 60. I could always downsize once both kids have left and I’d, presumably, have a nest egg built up in bricks and mortar.

Has anyone done this? Good idea?

File a claim with the child maintenance agency.

You should be able to get a mortgage that's goes into your retirement years if you have a decent pension.

If not.. Can you get a flat for 130k?

Look at 50:50 shared ownership options. Might enable you to get a £250k flat owning 50% and pay a small rent on the other 50% with an option to buy later on with a mortgage or pension lump sum.

Alternatively, yes you could look at an interest only mortgage. Any way you can find of paying the capital back at the end is fine, including a pension lump sum, but a lot of places may require more evidence than is easy to obtain so you may have to state that you want to sell the property at the end to repay the capital.

However, with rates where they are currently, the interest could still be a fair whack each month.

We’ve got a part interest only mortgage (most of it is IO) and the criteria were really strict, including a household income of over £100k or one earner over £75k.

You're best off speaking to a broker, as they will know which lenders will allow your pension lump sum as the repayment vehicle.

Interested in your outcome as this is something I have considered too (part and part mortgage). I’m not in the position to sell until next summer.