Interest only mortgage issue
Discussion
Got a potential problem looming with my Interest only mortgage.
We took out an interest only loan on the family home a number of years ago with the intention of changing to repayment when other financial commitments came to an end.
When we applied to change to a repayment mortgage we were refused based on credit score and was told 'we only just scraped through the first time' - this refusal was from the same lender we have the IO mortgage with!
Now, our current (interest only) mortgage will finish in 2017 - where, obviously, the total sum of £96k will be due.
Question is, if we can't get a repayment mortgage before then, what happens?
I know we would have the option to sell, pay off the remaining and walk away with the equity but to be honest, id kinda like to carry on living here..
options? :-/
We took out an interest only loan on the family home a number of years ago with the intention of changing to repayment when other financial commitments came to an end.
When we applied to change to a repayment mortgage we were refused based on credit score and was told 'we only just scraped through the first time' - this refusal was from the same lender we have the IO mortgage with!
Now, our current (interest only) mortgage will finish in 2017 - where, obviously, the total sum of £96k will be due.
Question is, if we can't get a repayment mortgage before then, what happens?
I know we would have the option to sell, pay off the remaining and walk away with the equity but to be honest, id kinda like to carry on living here..
options? :-/
Some strange 'advice' on this thread.
The main problem your going to have is your age. OP, how old are you and your wife?
Your going to have to fit the repayment of £96k into a very short period of time, which also means your going to see a huge increase in your payments I'd assume as your going to go from IO payments to a repayment mortgage, over a short period and probably on a higher rate too....
The main problem your going to have is your age. OP, how old are you and your wife?
Your going to have to fit the repayment of £96k into a very short period of time, which also means your going to see a huge increase in your payments I'd assume as your going to go from IO payments to a repayment mortgage, over a short period and probably on a higher rate too....
op: why on earth have you not been setting aside some capital aside every month to repay the principal? just because the bank wouldnt allow you to turn to repayment didnt mean you couldnt set it to one side every month??
if I've misunderstood then I apologise but the whole situation seems pretty strange and your repayments if you want to pay back nigh on 100k over 5 years will be pretty eye watering..
if I've misunderstood then I apologise but the whole situation seems pretty strange and your repayments if you want to pay back nigh on 100k over 5 years will be pretty eye watering..
Edited by princeperch on Wednesday 29th August 21:29
Not sure what you two are talking about, but whatever it is, it's not applicable to the OP.
His mortgage ends in five years, not his product but the entire mortgage. In five years time the last interest Payment will be taken and the. They will expect £96k to be Paid by the end of that month.
It has nothing to do with interest rates or SVR's....
His mortgage ends in five years, not his product but the entire mortgage. In five years time the last interest Payment will be taken and the. They will expect £96k to be Paid by the end of that month.
It has nothing to do with interest rates or SVR's....
Sarnie said:
Not sure what you two are talking about, but whatever it is, it's not applicable to the OP.
His mortgage ends in five years, not his product but the entire mortgage. In five years time the last interest Payment will be taken and the. They will expect £96k to be Paid by the end of that month.
It has nothing to do with interest rates or SVR's....
Err, not quite sure you understand. The OP just needs to remortgage before then. Intrest only or repayment, makes no odds. Just a new facility in place sometime in the next 5 years, thats all.His mortgage ends in five years, not his product but the entire mortgage. In five years time the last interest Payment will be taken and the. They will expect £96k to be Paid by the end of that month.
It has nothing to do with interest rates or SVR's....
cashmax said:
Err, not quite sure you understand. The OP just needs to remortgage before then. Intrest only or repayment, makes no odds. Just a new facility in place sometime in the next 5 years, thats all.
Of course I understand, it's my job to 
Yes he 'just' needs to remortgage before the five years is up. But, the other poster was suggesting that in five years time the rate will just revert to the SVR and therefore there's no need to worry, which is incorrect.
If there is only five years left then it may be a fair assumption that the OP may have had this on IO for the last twenty years. My initial concern would be the OP's age as he now has to fit the repayment of the whole £96k into a very short time frame.....
Ok - We got a short term IO mortgage, it was a 12 year i think. and its the entire mortgage that finishes in 2017.
The oldest person on the mortgage is 60 now so will be 65 when it ends - that said, the mortgage is joint between my mum and me - after dad died i offered to go joint on the mortgage to help mum out. Theres no reason why my partner and i (38&31) cant apply for a mortgage but our credit history isn't much better.
There are no trust funds, investments or anything else that we can use.
The worry is what if we are refused another mortgage when this one expires, what would happen?
The oldest person on the mortgage is 60 now so will be 65 when it ends - that said, the mortgage is joint between my mum and me - after dad died i offered to go joint on the mortgage to help mum out. Theres no reason why my partner and i (38&31) cant apply for a mortgage but our credit history isn't much better.
There are no trust funds, investments or anything else that we can use.
The worry is what if we are refused another mortgage when this one expires, what would happen?
Pixelpeep said:
Ok - We got a short term IO mortgage, it was a 12 year i think. and its the entire mortgage that finishes in 2017.
The oldest person on the mortgage is 60 now so will be 65 when it ends - that said, the mortgage is joint between my mum and me - after dad died i offered to go joint on the mortgage to help mum out. Theres no reason why my partner and i (38&31) cant apply for a mortgage but our credit history isn't much better.
There are no trust funds, investments or anything else that we can use.
The worry is what if we are refused another mortgage when this one expires, what would happen?
You can't wait till this one expires to find out whether you will get a new one, you need to do something asap.The oldest person on the mortgage is 60 now so will be 65 when it ends - that said, the mortgage is joint between my mum and me - after dad died i offered to go joint on the mortgage to help mum out. Theres no reason why my partner and i (38&31) cant apply for a mortgage but our credit history isn't much better.
There are no trust funds, investments or anything else that we can use.
The worry is what if we are refused another mortgage when this one expires, what would happen?
Whether that is just to remortgage to another lender on IO but on a longer term (some lenders will go to 70 years old) to buy yourself another five years or remortgage and move it onto a repayment mortgage.
If you do nothing, in 2017 the lender will want their money back. Whether its from your own sources or from the sale of the property, they will expect the £96k back that you borrowed.
Can you afford to increase your monthly payments if you were to remortgage back onto a repayment product?
Sarnie said:
You can't wait till this one expires to find out whether you will get a new one, you need to do something asap.
Whether that is just to remortgage to another lender on IO but on a longer term (some lenders will go to 70 years old) to buy yourself another five years or remortgage and move it onto a repayment mortgage.
If you do nothing, in 2017 the lender will want their money back. Whether its from your own sources or from the sale of the property, they will expect the £96k back that you borrowed.
Can you afford to increase your monthly payments if you were to remortgage back onto a repayment product?
As it stands we currently can't get a repayment mortgage due to credit scoring - so it really is looking like we will have to sell at the moment, My other half is in a payment plan due to a messy previous relationship which doesnt finish until 2016 so we cant apply for any credit in her name until that has been satisfied.Whether that is just to remortgage to another lender on IO but on a longer term (some lenders will go to 70 years old) to buy yourself another five years or remortgage and move it onto a repayment mortgage.
If you do nothing, in 2017 the lender will want their money back. Whether its from your own sources or from the sale of the property, they will expect the £96k back that you borrowed.
Can you afford to increase your monthly payments if you were to remortgage back onto a repayment product?
Pixelpeep said:
As it stands we currently can't get a repayment mortgage due to credit scoring - so it really is looking like we will have to sell at the moment, My other half is in a payment plan due to a messy previous relationship which doesnt finish until 2016 so we cant apply for any credit in her name until that has been satisfied.
Why do you need to apply for it in her name? Isn't the current mortgage in yours and your mothers name?Sarnie said:
Why do you need to apply for it in her name? Isn't the current mortgage in yours and your mothers name?
Mum & Me - refused for a repayment mortgageMum is 60 now - thought that was getting a little on the risky side for a lender
its why i thought the best option would be partner and i once her PP has finished?
Pixelpeep said:
Mum & Me - refused for a repayment mortgage
Mum is 60 now - thought that was getting a little on the risky side for a lender
its why i thought the best option would be partner and i once her PP has finished?
Without knowing your details, just because one lender said they wouldn't give you a repayment mortgage doesn't mean you can't get one full stop.Mum is 60 now - thought that was getting a little on the risky side for a lender
its why i thought the best option would be partner and i once her PP has finished?
Most lenders will lend to 70, some 75 even.
Also, your partner is very unlikely to be able get a mortgage if she is currently in an IVA,due to the adverse credit that will be registered on her credit file, so waiting till 2016 isn't really an option for you either.
Sarnie said:
Without knowing your details, just because one lender said they wouldn't give you a repayment mortgage doesn't mean you can't get one full stop.
Most lenders will lend to 70, some 75 even.
We were refused a repayment mortgage by the people we have our IO mortgage with, We asked if they would convert it into a repayment and thats when they said due to our credit score they would have to decline.Most lenders will lend to 70, some 75 even.
We assumed that if the same lender wouldnt give us a repayment option (even though our payment history with them has been faultless) then there would be NO chance anyone else would touch us?
i realise by using the word assume i have opened up a world of abuse, but it was exactly how it went down so i have my flame suit enabled.. :-/
It's obviously of no consolation to you but I'm in a similar mortgage position. In an IO deal with 5 years left to run. 60 years old and 65 when the current deal ends. No repayment vehicle, and no intention of getting one. Mortgage with RBS so unlikely they'll want to renew it, assuming they're still in business then. Absolutely appalling credit score. However, there's a bit of equity in the house, so it looks as if selling and buying somewhere cheaper is the likely answer. Bit of a joke, really, but that's formula banking for you!
groak said:
It's obviously of no consolation to you but I'm in a similar mortgage position. In an IO deal with 5 years left to run. 60 years old and 65 when the current deal ends. No repayment vehicle, and no intention of getting one. Mortgage with RBS so unlikely they'll want to renew it, assuming they're still in business then. Absolutely appalling credit score. However, there's a bit of equity in the house, so it looks as if selling and buying somewhere cheaper is the likely answer. Bit of a joke, really, but that's formula banking for you!
i admire your honesty !Pixelpeep said:
We were refused a repayment mortgage by the people we have our IO mortgage with, We asked if they would convert it into a repayment and thats when they said due to our credit score they would have to decline.
We assumed that if the same lender wouldnt give us a repayment option (even though our payment history with them has been faultless) then there would be NO chance anyone else would touch us?
i realise by using the word assume i have opened up a world of abuse, but it was exactly how it went down so i have my flame suit enabled.. :-/
No flaming at all.We assumed that if the same lender wouldnt give us a repayment option (even though our payment history with them has been faultless) then there would be NO chance anyone else would touch us?
i realise by using the word assume i have opened up a world of abuse, but it was exactly how it went down so i have my flame suit enabled.. :-/
As I said previously, just because they said no doesn't mean another lender would.
Who is your mortgage lender?
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