Woolwich - Am Likely to Be Unable to Pay Capital Off After Mortgage Term Ends

[Baching Mad]

Hi

 

Advice please.

 

I'm likely to be unable to pay off the capital amount owing on a mortgage with Woolwich in 3 years time. I've informed Woolwich of this and all they say is try and pay off as much as you can and then you'll be able to extend the mortgage with them when the term ends. I've got a great tracker deal at the moment which is interest only. Woolwich have calculated that any new repayment mortgage with them will be approximately £500 to £600 per month which I won't be able to afford.

 

I got made redundant 5 years ago and have struggled to find full time well paid work since. I now work part time and am trying to pay off as much as I can. I 'm 62 this year and I have got a small private pension which was given to me as part of my redundancy package. My mortgage ends when I'm 65 and I don't really want to be paying a mortgage after then. My endowments didn't pay out as much as expected and I did get some compensation which I paid off some of the capital owing.

 

I know that I can downsize my house and pay off the mortgage but I don't really want to do this just yet.

 

Can anyone suggest any alternative options.

 

Many thanks for any help given.

 

Best Regards

 

Baching Mad

[Andyorch]

" My endowments didn't pay out as much as expected and I did get some compensation which I paid off some of the capital owing. "

 

You didn't use it all to reduce the capital ?

 

How much short is remaining ?

 

Andy

[Baching Mad]

Hi Andy

 

Thanks for your reply.

 

I paid off as much capital as I could with the endowment payouts. I still owe approximately £30,000. House is worth about £260,000.

 

Is equity release the way to go?

 

Cheers

 

BM

[Andyorch]

The maximum they will extend is 7 years which would need to be a Interest and Capital arrangement...is that the period they have quoted you ?

 

Anything substantial in your pension pot ...draw down ?

[Mr.P]

Is equity release the way to go?

 

If you are in good health with a long life expectancy, and/or you wish to leave a sizable inheritance, equity release is a poor choice. Get some qualified advice from an IFA before going down that route.

 

Another option that you should stay well away from is any Sale and Rent Back agreements. The FCA state that they are high risk and should only be considered as a last resort.

[Baching Mad]

Hi Andy and Mr P

 

Thanks for your replies.

 

I used my pension pot to pay some of the capital off and keep the rest as savings. I could use these but I would not have any savings left.

 

Woolwich quoted me for 5 years extension not 7 years. I'm prepared to work until I'm 70 if I have to. I get my state pension at 66. I'm also married but my wife (51 years) is likely to be made redundant in November this year so we will miss her earnings. She will obviously try and get another job.

 

I don't really want to go down the equity release road as I've heard it's not a good idea and I haven't heard about sale and rent back agreements.

 

Cheers

 

BM

[Andyorch]

Go back to them and ask they reconsider a longer term and what is the maximum term possible.

 

 

£30K over 7 years

 

Per month, you repay assuming your interest rate stays the same 3%

£396

 

Total you'll repay over full term

(Includes mortgage debt, £30,000 + total interest £3,296)

£33,296

[Baching Mad]

Hi Andy

 

Thanks for your reply.

 

Looks like I've only got the option of either paying off the mortgage by downsizing in 3 years or extending the existing mortgage for 7 or so years on their terms.

 

Cheers

 

BM