Jim and Barbara, a retired couple aged 66 and 65, had always planned to use their pension lump sum to repay the final mortgage balance. When the lump sum became available they decided to use it to clear their business debt so they could retire. When the mortgage expired a few years later they had an outstanding mortgage balance and no way to repay it.
Only option to sell?
Jim and Barbara thought they had a home for life but with no way to repay their mortgage they believed their only option was to sell their house. Their mortgage provider recommended they contact StepChange Financial Solutions so they could explore all their options before committing to the sale of their family home.
Following a full assessment by Tim, our mortgage advisor, it was established that they could save their property with either a residential mortgage or an equity release plan. Tim also suggested Jim and Barbara” used some of their savings to reduce the amount they needed to borrow, which meant either option would cost them less in the long run.
They considered both options carefully and decided to re-mortgage to another residential mortgage with a building society. Their equity release options were dismissed as they wanted a repayment mortgage, so they could clear the mortgage as quickly as possible.
Our advisor recommended a 5 year fixed rate mortgage on a term of 8 years so they had the certainty their payments would not increase if interest rates rose. They also agreed an overpayment plan with the building society, to ensure the mortgage balance would be repaid within 5 years.
Tim’s advice meant that Jim and Barbara had the security of a fixed rate and a plan in place to be mortgage-free by their 75th birthday.
If your situation is similar to Jim and Barbara's then you can contact our team to get free and impartial advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.