Has anyone got a part interest only mortgage?

[WanderingNortherner]

Hello,

Just looking for ideas. I’m almost at the end of a long divorce and will have to purchase a new property soon (family home is too big and it’s full of memories). I need to give stbx 50% of the sale so we will get, roughly, £150k each. I’m 52 soon so conscious that the clock is ticking in terms of time to repay a mortgage before I retire at 67. We have been mortgage free a few years so I have had the luxury of not paying mortgage costs for a while.

Problem I have is this:

Decent 3 bed (and I would need a 3 bed as I have a boy and girl teen) is about £200k-£250k.
So, I would need anywhere in the region of £50-£100k mortgage. This is freaking me
out. Salary £50k per year but I am not in receipt of child maintenance and it’s costing me
a fortune having stuff for the kids to pay for. Anyway, both are over 18 soon so I wouldn’t get anything anyway. Plus, I am at a time in life (and I’ve worked hard and had a pretty bad deal in my personal life) where I want to travel a bit and do stuff for me (before I conk out). I, also, don’t want to be a position where I am struggling for money if all of my disposable income is going on a mortgage. Plus, I’m in a stressful job so don’t want to be tied to that.

I have a lump sum from my pension coming at 60 and another at 67.

Is it possible to get a mortgage with the first lump sum amount (£40-£50k) on interest only and I’d get the rest of the mortgage on repayment terms? I could then pay this amount off when I get the lump sum. Or, is it not worth it? If not, can someone give me an idea of mortgage repayments based on the figures above?

TIA

You need to talk to a mortgage broker.

Be careful with interest only. It sounds like you plan to pay the capital off with your pension payout, which.is good, aslong as your pension performs as expected. We got stung on the endowment type mortgage. The capital was interest only, and then we paid for an endowment policy, which we were told, would not only pay the mortgage off when it matured, but would also give us some surplus cash. Except the policy didn't perform as expected and there wasn't enough to pay off the mortgage. We were in a position where we could afford to pay the capital off, but it could have been much worse. We are now retired, mortgage paid off, but have a friend with an interest only mortgage which has gone very wrong for him, and he ended up selling his house and having to rent, not what you want after 50+ years of work.

Mortgages now go to 70, 75 and even 80 (mainstream lenders).

We are over 50 and were going to get a 25 year repayment mortgage to keep our payments lower for the next 3-5 years with the expenses of teens/university. We would then have remortgaged and brought the term down. However, that mortgage company wouldn't lend us quite what we needed. So we ended up taking a mortgage with a lender who go up to 70. This of course meant the repayments were higher. So we ended up with part of the mortgage part interest only. I have been making a monthly overpayment on the interest only part of the mortgage and it feels better to see it going down.

So I'd say it is doable but check if you can get a mortgage which is longer term instead. Charcol has good advisors.

Way back in 2000 I did a similar thing, had a mortgage that was 75% repayment 25% interest only. I don't know if it is still possible.

As others have said, in principle it's sound, but how fixed and firm is the amount of the pension lump sum, or is it dependent on something (like investment returns or actuarial adjustments) that mean it might end up being lower than you expect? Just to bear in mind.

My house is interest only but I over pay it, payments are £350 but I have a direct debit for £800.

I think I’ll have to speak to someone. I’m going to get somewhere that I don’t need a mortgage tbh.

The marital home I am about to leave has a part and part mortgage, has had for about 4 years. When looking at my new home, I definitely got a broker to quote for part and part and it was possible. In the end I've scaled back to a smaller property so can afford a full repayment mortgage as will be getting zero maintenance. I earn a bit less than you and am about to start a 24 year mortgage at the same age as you.

Speak with a broker but upper age limits for mortgages are not what they used to be, another (mainstream) lender has just announced today that they will now go to age 75.... not that its an ideal plan obviously, but it does open up options.