Q My husband suffered a brain injury 23 years ago when he fell off his bicycle. His insurance did not cover the injury, so our finances were affected and we now have an interest-only mortgage of £78,900 with eight years remaining. We are both 57 years old.
We now have a decision to make about the mortgage. My husband receives an occupational pension of £1,030 every month as well as disability living allowance and employment and support allowance which tops up his monthly income to £1,800.
Our outgoings are £1,107 per month which includes spending of £350 on food and £341 on the interest-only mortgage. This leaves £693. From this surplus I use £300 to make overpayments on the mortgage.
Should I ask my lender to covert to a repayment mortgage and extend the mortgage term to tie in with our 75th birthdays? As long as interest rates remain the same, this would give us 18 years to repay the mortgage and a monthly mortgage payment of around £600. Or should we just keep making overpayments at £300 a month and hope that in eight years’ time, when we are 65, we will be able to agree a solution to stay in the house and keep paying the mortgage? MO
A I don’t think that crossing your fingers and hoping for the best is the most suitable course of action. If you were simply to carry on making overpayments of £300 a month for the next eight years, you would be left with an outstanding mortgage debt of £50,100 at age 65. Even if you were able to double your monthly repayments to £600 – which might be possible given that you say that you have surplus income of £693 every month – you would still be looking at an outstanding debt of £21,300 in eight years’ time.
Your suggestion to talk to your lender about restructuring the mortgage is a very sensible one. As you are no doubt aware, converting the mortgage to a repayment which ends when you are 65 is not an option because the monthly mortgage repayment would be an unaffordable £1,006 (assuming an interest rate of 5.19% which is what I think you are currently paying).
If you can convince your lender covert the mortgage to repayment and to extend the term to 18 years, the monthly repayment would be a much more affordable £563. But you’ll have to cross your fingers and hope that your lender is one of the few who is prepared to lend well beyond a borrower’s state pension age. Some will lend up to age 75 although more often lenders won’t lend beyond age 70. If your lender is one of those, it would mean that the longest mortgage term you could have would be 13 years which would mean a monthly mortgage repayment of £697.
Muddled about mortgages? Concerned about conveyancing? Email your homebuying and borrowing worries to Virginia Wallis at virginia.wallis.freelance@theguardian.com
