Interest only mortgage help

[Worriedsickandscared]

Not sure if I should post here or not. Name changed.
Basically we have an interest only mortgage, due to finish in 3 years.
We want to downsize but still have 2 adult children living here so that does influence things. Both desperately saving for deposits.
My question is if we sell and clear the mortgage we will not have enough equity to buy another property so would we be able to get a small mortgage to cover the difference?
Example sell house for £350000 clear mortgage of £180000 leaves £170000. We have £30000 we could release from pension so looking at possibly new mortgage of £70000. Obviously this isn't taking into consideration moving costs etc. Annual income £60000.
We obviously need to speak to our mortgage people but is this an option in principle?
Please don't judge our obvious stupid mistake of financial idiotic choices. I know we have fucked up big time and I'm petrified. Both 59. Please help.
I've also posted this in property/diy but maybe some here is a mortgage/financial/broker advisor who can help.

In the same boat. We were young ftb and have been screwed over. And told we didn't have a claim for being miss sold the mortgage as we went , being clueless, through the estate agent.

Bloody covid hasn't helped. Time is running out for us and although I love our house I would be happy to move to smaller and different area if we can.
I just want to know my options so I can speak with the mortgage company without being a complete idiot. And yes I feel we were missold this. We had an endowment policy that wasn't performing as expected so why would be say ok, sod let go interest only with no plan on how to pay it off! We were sold loads of various insurance policies through the independent advisor but none have any cash value.

Completely our fault for not checking but what do we do now?
If I knew we could clear the IO mortgage by moving and take on a smaller one for the next 10 years then we could live with that. At least when we die the kids might have a small inheritance.
It's so scary. I don't know what to do. Dh has head in the sand and has no idea about house costs etc. Thinks we will be able to sell and just buy something along to same lines for what's left in the equity of the house but there won't be enough!

What's important here is your income/affordability and how long you intend to keep working/what your income will drop down to in retirement. Lending into retirement is more common now so age of itself isn't a barrier but you need the figures to stack up.

My dad got a ten year mortgage at 59 so it is possible but it was a very LTV ratio. So depends on your individual circumstances but it is possible

We need to talk to the mortgage company asap then. How do I find a decent mortgage broker advisor?

There are mortgage lenders who will lend to people your age and quite a bit older. I’d advise chatting to a few mortgage brokers.
I think you are being very harsh on yourself. I think it’s fixable. You have equity and a good income and could afford a new mortgage.

Exactly what Sundeed said, there are a number of later life lending options, go and speak with a independent mortgage broker who will lay out your options. Dependent on your pension provisions it is very likely you will need to work beyond state retirement age.to work past state retirement age. Also the money you have said you can get from your pensions, is that your tax free amount?

I've been told about London and Country, John Charcol and Mortgage Advice Bureau are quite good. Worth calling and having a chat.

Yes to tax free amount. Maybe a bit more, it's been difficult with covid actually speaking to anyone.
I'm so scared and actually in tears here. 😥

Think your best to get all your papers and figures together and speak to a local independent mortgage broker. Sorry I didn't understand, you are paying the interest only part but what happened to the endowment policy to cover the mortgage?

You'll be fine
Contact a mortgage advisor a see what your options are...
they will probably transfer you over to a repayment mortgage and then you can stay or move when you like

Go on a mortgage calculator and see if you can afford the 170k on repayment of 20 years

Halifax will lend up to age 78, but obviously they need to know how you will pay the mortgage after retirement

I just did a very quick online calculation with the figures you gave
And because you have to much equity in the house 71% with 60k earnings a year
They would lend £249k on a twenty year repayment mortgage

So I think you'll be fine!

God, endowment mortgages were shit. We’d have been better off putting the money in a box under the bed. We changed to repayment but ours was much smaller than yours. Get financial advice, but with the interest rates so low, and an annual income of 60,000 it might be possible to get a 10 year mortgage for the 180k and just throw everything you have at it. No judgement here - it’s a horrible position to be in.

Also if you are not ready to move currently, I assume you can afford higher mortgage payments than you are making at the moment servicing just the interest only mortgage, start immediately by paying down some of the capital each month, get into the discipline of paying extra, month after month. Is your current interest only mortgage on a low rate or is it on the lenders standard variable rate?
Review all of your insurances you said you've got, look at what you are paying and what the cover provides, are the still appropriate for your needs? Don't just cancel though as insurance cover can be very valuable if you need to claim.

Stepchange have a financial solutions team that can give advice on your exact scenario. They are free and unbiased - their direct number is 0808 168 6719

I can’t see why you can’t get a mortgage. Fiddle around on the nationwide website. I got one in my own name a couple of years ago and I’m 56. I’ve take. It up to 67 but I know NW will consider 70. Not sure why you need a broker - I find NW one of the cheapest mortgages around and very straight forward. Good luck.

@Tangledtresses

I just did a very quick online calculation with the figures you gave And because you have to much equity in the house 71% with 60k earnings a year They would lend £249k on a twenty year repayment mortgage

So I think you'll be fine!

Not at OP's age!

By the way 59 isn’t old. Can we stop the ‘old” comments. 😂😂

For info the team at Stepchange are fully qualified mortgage & equity release advisors so a good place to start if you're not sure what to do!

I think maybe first stop is our mortgage company Santander.

Can we just speak with Nation wide even though we don't have any dealings with them?

I’d use a broker, they have access to thousands of mortgages. They cost a few hundred pounds and save you so much time.
I’m in the process of helping my DS get a place and we need quite a niche type of mortgage. I’ve spoken to about 6 brokers in the last 2 weeks and they do know their stuff. I’m really good at researching things but only found out about a quarter of the lenders they have suggested.
Some won’t give out the names of the lenders but other let the names slip and then you can do the application yourself if you wanted to.

You can transfer an existing mortgage to a new provider. Or you can get a new mortgage with a new lender.

Do you have to make that decision now?
If you are both still working you would still get a 5 year fix interest only which will cost you about £400 p/m. You could then save in your pension (tax free and up to £40k per year each) with a view to taking the 25% cash sum in a few years (hoping they don't change the rules).
That and the equity in your current home will put you in a better position then taking out a mortgage with you will need to pay with out of taxed money.

I'm very confused.
If we changed mortgage to repayment but reduced it by using our savings and 25%tax free pension. New mortgage of approximately £140000. Would that be a good or stupid idea? We stay in the house for a few years, reduce the mortgage amount and would have more equity to be able to move.