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Original poster

Interest only mortgage help

71 replies

Worriedsickandscared · 05/02/2021 11:23

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.

OP posts:
LizzieSiddal · 05/02/2021 16:57

I do know what you mean. We have interest only, we have 8 years left and it’s only through luck that we are now starting to pay off with lump sums. Previously we had come to the same conclusion as you that we would move, the year before the mortgage was up and just buy a house with whatever money we had.

Recently our accountancy told us that there are ways of staying in the house if you have a enough income/pension, so please explore all options before taking large amounts from your pension.

maras2 · 06/02/2021 11:35

As someone posted previously, do try Martin Lewis Money Saving Expert site.
There's a whole section for mortgage advice, the majority of posters being in the same position as you.
Lots of good and non judgmental help and advice available there.
Good luck Flowers Mx.

sabrinathemiddleagewitch · 06/02/2021 11:41

Just go to a mortgage broker OP, there are many that are free to use. Google a few locally to you. Explain your situation and they will give you options. Feel free to use more than one to get multiple options.

They earn money from referral fees to mortgage but are legally obliged to give you honest advice.

Do NOT just go to your bank and take their advice and get a mortgage from them. You will not get the best rates.

Mumoftwoinprimary · 06/02/2021 11:45

Op - are you paying more than the interest on the mortgage at the moment?

The man thing the bank / building society cares about when giving you a mortgage is whether you can afford the payments. If you have been reliably overpaying your interest only mortgage then that shows very clearly that you can.

Apileofballyhoo · 06/02/2021 11:57

I'd try and keep the pension fund money where it is if possible. Long long ago my parents got a new 10 year mortgage at age 55.

I'm in Ireland but I've just run your numbers through an online mortgage calculator (ptsb) and they'd give you 140000 for 1250 pm over 11 years. I'm sure there are much better deals out there. It's just to give you an idea. Run your numbers through the online calculators.

TierFourTears · 06/02/2021 12:02

What is the value of the endowment policy, or whatever scheme you had running to pay of the balance? ie what is the predicted shortfall?

How much extra cash could you find a month right now? Without sacrificing pension contributions etc? Are you saving what you can to increase the size of the repayment pot in 3 years. Or is the 60k all accounted for in interest payments and general living?

If you could take out a mortgage, could you afford to pay it now? What about on predicted retirement income?

Margaritatime · 06/02/2021 13:04

Definitely get independent financial advice.

I know this may not be an option but when your dc move out have you considered having lodger (s) to give you extra income to help pay the mortgage.

TeaOneSugar · 06/02/2021 20:20

I know some who is a financial advisor for a bank and has an interest only mortgage, it allowed them to buy a much bigger house than they could really afford but wipes out the DHs substantial pension lump sum payment and much more besides, so I wouldn't be too hard on yourself, you're not alone.

I'm not sure I'd necessarily advise using a broker, I found they just added pressure they're so keen to get your business I was inundated with calls and emails, I'd start with an appointment with a Santander mortgage advisor, my mortgage is with them and my advisor was really good.

Moneyfornothingkerbsforfree · 06/02/2021 20:46

My mum got a 6 ish year mortgage at 71.
6 was the most they would give her. She borrowed about 60000 ish and her mortgage payments are really high but meds must. She’s self employed and still working.

Moneyfornothingkerbsforfree · 06/02/2021 20:47

She was in same position as you, interest only, head in sand. Said she felt massive relief when she finally sorted it.

Moneyfornothingkerbsforfree · 06/02/2021 20:54

I’m sure I remember that the government told lenders to be more flexible to older lenders, I remember reading about it before my mum
Applied.
Your going to have to accept being pretty skint for a few years where you Chuck everything at it.

Dogsarehairy · 06/02/2021 20:56

@User0ne

If you can't buy somewhere reasonable for £170k then you are living in an expensive area. Why not move somewhere cheaper and still have the pension to live on?

I'm slightly amazed that you've made it so far in life with so little financial understanding (not helpful I know).
Before you speak to any advisors etc I think you should do some reading about mortgages somewhere like Money Saving Expert so that you understand what the different types are, what things lenders are likely to consider, what things you might want to think about etc

Otherwise you're totally dependent on someone else telling you what they think is best for you (and you might disagree if you had greater knowledge). It sounds like that's how you've ended up in your current predicament.

You are living on another planet

I live in the North and nothing here for £170k- nothing

Shamoo · 06/02/2021 21:12

I used L&C for some quite complex pension issues (different to yours but far from standard) and they were excellent - and free!

BarbaraofSeville · 06/02/2021 21:26

Plenty of places have family houses in nice areas for £170k, although it's impossible to say whether that applies to where the OP can live.

OP did you get compensation for the misold endowment. Wasn't there supposed to be compensation for the shortfall? Look at money saving expert, but if you need to complain, use a free service, not one that takes a big lump of the compensation.

huuuuunnnndderrricks · 06/02/2021 21:28

How did you genuinely
Not understand you weren't paying attention to dd your mortgage ? We were young and naive but it was all explained to us with an endowment .

TeaOneSugar · 06/02/2021 21:33

There are pretty of 3 bed houses and even bungalows in nice areas for well under £170,000 where I live, you can buy a 3 bed house for under £100,000 in fact, but if the OP doesn't live near me that's not much help.

TeaOneSugar · 06/02/2021 21:38

@huuuuunnnndderrricks

How did you genuinely Not understand you weren't paying attention to dd your mortgage ? We were young and naive but it was all explained to us with an endowment .
When I took out an endowment 20 odd years ago the risk definitely wasn't explained to me, prior to that people had been doing very well out of IO mortgages and endowments, my parents paid off their mortgage with their endowment with a substantial lump sum to spare, if they hadn't had an endowment mortgage I might not have thought to question mine as early as I did.
Kitkat151 · 06/02/2021 21:44

Don’t be embarrassed....it’s happened to loads of people....I’m 55 and would have been in your position but was very lucky that when we went to the ombudsman ( some years ago) . The building society had lost all out paperwork so had so were directed to pay up the difference .....so we were able to get a repayment mortgage and put both our equity and the amount we had been awarded into the house...which got us back on track..... so it could easily have been me in your situation.... your 59 not 79 ... you’ve got time and earningS sufficient to turn this around... I hope it works out for you

chattycathy83 · 06/02/2021 21:52

Have you looked at the money advice service mortgage prisoner information? I'm not sure of your personal situation so it may not be the right fit but they have a large list of brokers who are committed to helping mortgage prisoners (people trapped on interest only mortgages. Even if you are not considered a mortgage prisoner those brokers had to commit to being able to provide later life mortgage advice or be able to refer you to someone who can.

If you tell the adviser what you're concerned about and what an ideal situation looks like for you they should come up with options.

smileyforest · 08/02/2021 22:24

There are ways around this...What about Retirement IO mortgage? Lots of different mortgages available to older people now and because of the IO mortgage fiasco ....
.....

CookieDoughKid · 04/03/2021 19:17

Honestly it is worth sitting down with a financial advisor to go through it all with a fine tune comb. None of us can advise you here as there a number scenarios to work through.

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