Advice on 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.

Do you mean a mortgage for your new property?
There will be mortgages available to you but you may find you’ll need to pay them off on a 10 year term.
Speak to a good broker ASAP

A 70k mortgage sounds reasonable at your age. Do you have an idea of how much your pension will generate in terms of income? In case you want to retire in your 60s.

Yes to new property. Not 100% sure but when Dh retires income approximately £44000.

How do I find a good broker? Feel frightened as we both are crap obviously with money. Should I talk with mortgage company first or independent broker first? Btw we thought we had an endowment policy but apparently not. Can't even remember why or how we thought we were going to pay this off.

Change to a repayment mortgage right now. Today. You'll be able to repay over 11 years (standard mortgages can run till you're 70).

Waiting three years means you'll have three years less to borrow over so higher repayments and the cost of selling and buying again. And still the same amount to borrow.

I don't think we could afford the repayment mortgage. I think our only option to to sell.
I want to know if at our age and income if we would be able to get a mortgage for approximately £70000. Do mortgage companies do this sort of thing?

Do mortgage companies offer mortgages? Errr yes!!!! £70k mortgage seems ok with £60k income. But the longer you leave it the less likely as your repayment period gets less and less.

The cost of an 11 year repayment mortgage starting now would be about £1600 a month - can you not afford that?

11 year mortgage for £70000 is £1600 a month? No can't afford that

The mortgage calculator I used said £70000 over 11 years is approx £654

How would you afford the remortgage payments in 3 years time. If it’s £1600 pm over 11 years it will be more than that over 8

I would also swop to a repayment mortgage ASAP and would start asking adult children for rent. This would increase your equity for when you sell and get you used to having less money and paying for the mortgage. Even if it's only £250 a month from each child that's an extra £500. Banks will give a mortgage till your 70 but you have to repay it by then so would only be over 11 years if you started now. The longer you leave it the higher the repayments will be.

@Worriedsickandscared

11 year mortgage for £70000 is £1600 a month? No can't afford that

That's for the £180k you currently owe. Tbh on your salaries that should be just about manageable. Particularly if you charge your kids rent! If you can release £30k from your pensions then that's wiggle room if you need it.

@Worriedsickandscared

The mortgage calculator I used said £70000 over 11 years is approx £654

It won't be 11 years though will it if you're not planning in tackling this for another three years.

Do an ingoings and outgoings thing. List absolutely everything on it and you will see where you can cut back.

You can start making an inroad now which will make things much easier in 3 years. You could for example overpay your current mortgage by as much as you can every month.

If you look on the Money Saving Expert forums there is one for mortgages and endowments which is populated by brokers. They can give you advice.

So being very dense here.

Are you saying if we change to repayment mortgage now to reduce mortgage, then when we sell we will have more equity. If we also released the pension money that would reduce mortgage. Then we could sell and downsize in the future. Have I understood it correctly? Kids pay rent already £200 each.

Major problem is getting husband to talk to anyone unfortunately

Yes you will have more equity as you will owe less as you will have already paid some of the £180000 you currently owe off. You would also then maybe save having to move at all if you found out you could manage to pay for it after all. Also would be no three year deadline looming. Only downside is you will have significantly less disposable income now but on your salaries you should be able to afford it and you will have to take the hit on disposable income sometime in the near future anyway.

Give the brokers London and Country a call. They are full market brokers, very helpful and work fee free, so their advice won't cost you anything. Tackle this now rather than in 3 years.
If you do need to wait for the 3 years for when you move, do an income and expenditure list now and work out if you could make regular payments against the capital mortgage amount. The more you pay off now, the more equity you will have in 3 years. Just check with your mortgage company about the rules around capital payments and if there is a limit per year.

@Worriedsickandscared

So being very dense here. Are you saying if we change to repayment mortgage now to reduce mortgage, then when we sell we will have more equity. If we also released the pension money that would reduce mortgage. Then we could sell and downsize in the future. Have I understood it correctly? Kids pay rent already £200 each.

Yes!!!!! Any inroads you make now will be hugely beneficial - the interest will go down as you're charged on a lower amount for a start. However to be blunt you CAN afford the change the lot to a straightforward repayment mortgage. And should.

OP I'm a little confused - can you clarify this bit?

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.

Is it...
House value = 350k
Current interest-only mortgage = 180k
Leftover cash from sale = 170k

Then you're thinking of adding 30k from pension, possibly taking out a 70k mortgage and that makes 270k to buy a smaller house? Just wondering why you've decided on the 70k mortgage there - are you assuming 270k as a budget for your next house?

Thank you everyone. I feel awful as financially this is all on my husband's shoulders. I don't work anymore due to elderly parents and various other reasons I'd rather not say.
Will definitely talk to London and Country.

Yes Goodwinter. If we could do that we could move to a house slightly smaller but still nice. Hopefully with just a smaller repayment mortgage.

Yes budget of £270 for new house