In a pickle, and trying to go to interest only mortgage. Advice please?

[Divingindeep]

Hi
We bought our hopefully forever home a couple of years ago. Went for the maximum we were allowed with the bank and put in all our savings.
All was fine for a while but my business rapidly deteriorated last year and this winter has been a massive struggle. We used our savings as I wasn’t earning, and now that’s ran out.
I have phoned the bank and asked if we could go to an interest only mortgage for a while until things are easier. I’m planning on winding down the business now and selling off the business assets and just get a normal job. Selling off the assets will generate good money in itself.
We were then planning to use the snowball method to tackle any debts we have. (Bank loan/credit card). But the bank have said that there are massive restrictions on interest only mortgages and said that we would be best to look at other mortgage options, that it would affect our credit score.
I’m really confused now and don’t think I’ve managed to get much useful information from the conversation.
He said something about they would take 60% off my husbands pension if we went interest only. Also we would need to be earning minimum £50,000 to get an interest only.
We originally used a broker for the mortgage and now wondering wether just to go back there.
I suppose I’m just looking for ideas about the mortgage, and if anyone has been able to transfer from a fixed rate repayment to an interest only.
If you’ve managed to follow this and reply, thank you so much!

Go to your broker.

Your bank are only interested in whatever makes them the most money.

Go back to the broker.
Rent out a bedroom for a while instead?

You will struggle these days to get an interest only mortgage without a repayment vehicle.

The quickest and cheapest option would be to see if your current lender could increase your term and thus lower your repayments. However as you only bought your house a couple of years ago and put in all your savings I'm guessing that you probably maxed out your mortgage term? I would give a broker like London and Country a call to see if they have any ideas.

We have an interest only mortgage as a temporary measure due to our house sale falling through.

But there are a lot of conditions. We have massive equity. The house we are selling for £200k only has an £11k mortgage on it and the house we have just bought for £325k we put down a £200k deposit. We have a joint income of £65k. No-one has mentioned it affecting our credit score.

We were unable to get one with our existing building society and did go through a broker.

I agree go back to the broker, they will be looking for the best option for you not the bank.

I suspect you might be better off asking for short period off paying entirely. That’s a lot simpler for them to organize than changing all the terms of the mortgage.

They did say we could have a two month payment holiday. Then after that the payment would go up a bit to make up for it.
Yes by appointment, we took it out over 35 years which would take us to 65, and we could extend for a further 5 years up u til the age of 70.
I know it’s not guaranteed these days, but we would be hoping to pay off entire mortgage before then with inheritance (please don’t get angry) as we are lucky that both sets of parents are quite well off. Again I know it’s never guaranteed.
Other option is to just muster on through the summer and see where we are once my business assets are sold. Could quite probably pay off any debts with that.

I'm not sure a broker is the correct person to be speaking to. How long is your initial fixed rate (2yr/5yr)? A broker will only be looking for a new deal for you, if that's the case then you may have an early redemption fee, which on a 30 year mortgage will still be thousands.

If you are in financial difficulties then you are really relying on offers of support from your current provider or one of the recognised debt charities.

It is extremely difficult to get an interest only mortgage these days, often with loan to value and salary stipulations to be fulfilled, as well as a solid plan to repay the full balance at the end of the term i.e. pension lump sum. By all means speak to a broker, but if you currently have no income, you're not going to be able to change provider as you won't pass affordability checks, and you have no repayment vehicle. I would be taking the two month break they have offered you and then get a job.

Oh and don't tell them you'll pay it off with inheritance. Aside from the fact they won't accept it as an answer, you may find that inheritance is swallowed up in care costs and there's nothing left.

Yeah no lender will accept inheritance as a repayment vehicle unless the person has already died and the estate is being settled.

I think you are going to have to try and accelerate your plan to get a job and sell your other assets. If you can't extend your term or go interest only your only option is to generate more money