Interest Only Mortgage

Aruffell

Aruffell

Aruffell

Soldato
Joined
29 Dec 2004
Posts
5,653
Location
Chatham, Kent
Hi all,

Always full of clever people on here so hoping someone may know.

Asking for a friend here (actually am, as I'm nowhere near retirement age).

Someone I know ended up getting 2 mortgages, one for £38k and one for £5k and both are now with the same provider on interest only products. The provider screwed up and both end in 2046 when the mortgage owner will be 100 years old meaning that the provider screwed up as obviously they are meant to end at retirement age. Their fault and has been like that now for

Obviously with interest only mortgages, they are never getting paid off. One of them they was paying £11 per month but have now increased it to £40 but obviously this isn't going to do anything as they will never be paying off the capital of the mortgage so seems pointless to me to pay any more.

My major question for them is - Would they be able to stay with the same company (as they are now 69 years old so won't get a mortgage elsewhere) and simply change the product to a repayment mortgage so at least they could look at paying the mortgages off?

Any help is greatly appreciated.

Many thanks.
 
Unlikely imo. Changing a mortgage will be a new product sale to the mortgage company so they'll need to go through all the usual affordability checks and if they are retired it's unlikely they'll pass. Surely the point of continuing to pay the mortgage is so that their home doesn't get repossessed?

Options: Sell and downsize or pay the mortgage off somehow. Do they have a pension they could access?
 
Long and short of it is that they just came into some money from a death and especially with the small £5k mortgage, they are toying with the idea of paying this off, but is it worth doing so or would they be best keeping £5k in savings instead?
 
There's no rule that mortgages have to end at retirement age, it's up to the provider. I know Nationwide offer mortgages up age 85.
 
banks are total ***** they WILL notice their mistake THEY WILL demand £43K from your friend at some point way BEFORE your friend is 100.

If you over pay an interest only product it will reduce the capital so the interest repayments till slowly go down, if you are in the initial period of interest only and over pay you may get massive fines (read the small print confirm with bank).

So there is no need to change the product your friend has,

*source I have 2 interest only mortgages, personally it seemed logical as my fixed monthly outgoings are at their minimum but I can massively overpay and with the product I have I can claim back the overpayment if I need to

** im not an expert im assuming your mortgage is similar to mine
 
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When said person applied to borrow this money on an interest only basis, what did they tell the mortgage provider they were using as a repayment vehicle to redeem it?

When they signed for it, with all the paperwork stating how long it was over etc, why did they not raise it with the lender at that point if it was wrong?

Could it be that it was an equity release product from the off?

Currently there is also no evidence of ANY mistake being made and need to know a lot more info before that can be proven.

Please also ignore the scaremongering of the poster above me who clearly does not know what they are talking about.
 
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Are they still in a fixed term or are the out of that period now? Ie you usually sign up for 2/3/4/5 years at x% interest rate. If they are out of the fixed term period then you can clear the mortgage in full without penalty but if they are within that period then you can usually only overpay the mortgage by 10%. A quick call to the lender will tell them how much they can repay.
 
I believe it was a lifetime tracker. Will be calling the mortgage company with them and trying to understand it all. Thanks for the advice and the scaremongering of demanding the mortgage ha.
 
Aruffell said:
Hi all,

Always full of clever people on here so hoping someone may know.

Asking for a friend here (actually am, as I'm nowhere near retirement age).

Someone I know ended up getting 2 mortgages, one for £38k and one for £5k and both are now with the same provider on interest only products. The provider screwed up and both end in 2046 when the mortgage owner will be 100 years old meaning that the provider screwed up as obviously they are meant to end at retirement age. Their fault and has been like that now for

Obviously with interest only mortgages, they are never getting paid off. One of them they was paying £11 per month but have now increased it to £40 but obviously this isn't going to do anything as they will never be paying off the capital of the mortgage so seems pointless to me to pay any more.

My major question for them is - Would they be able to stay with the same company (as they are now 69 years old so won't get a mortgage elsewhere) and simply change the product to a repayment mortgage so at least they could look at paying the mortgages off?

Any help is greatly appreciated.

Many thanks.
Click to expand...

Why don't there children or someone close, pay off the 5k off and the 38k make a contract with the proportional ownership. That why they avoid any IHT for that proportion.
 
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