Interest only mortgage term ended and husband refuses to downsize

Daisy183

I am 62 and live in a 3 bed semi detached house in London with dh who is 72. The mortgage term has now ended with £280,000 still owed. Dh is refusing to sell the property despite there being equity of over £500,000 in the property.

He claims that as long as we keep paying the interest on the mortgage, the house cannot be repossessed. I am doubtful about this and we are starting to receive letters from the mortgage company. We cannot afford to change to a repayment mortgage (I work part-time and dh is retired). I am worried that the house will be repossessed.

Yes, it is highly likely this is the same person who is in arrears. The situation described is a direct consequence of the mortgage term ending with a large balance still owed. When the capital is not repaid, the account goes into default, and the monthly payments are no longer covering the debt. This is what puts them in arrears and triggers the letters from the mortgage company, leading to the very real fear of repossession. It's a very sad and stressful situation.

This is an incredibly stressful situation, and your worry is completely justified.

Your husband's understanding is dangerously incorrect. A mortgage term ending with a large balance outstanding is a default on the loan agreement. The lender is not obligated to simply let you pay interest indefinitely. The letters you are receiving are the first legal steps toward repossession.

They have the right to demand full repayment of the £280,000 immediately. If you cannot pay, they will ultimately take you to court to force a sale of the property to recover their money.

You are facing a serious financial emergency. You must seek independent, professional advice immediately. Contact StepChange Debt Charity or Citizens Advice for free, confidential guidance. They can help you understand your options, which may include selling to clear the debt and downsize, or speaking to your lender on your behalf to negotiate a solution. Do not ignore this.

Honestly, just paying interest won’t protect you forever - seeing what options are usually available at this stage can really help www.theguardian.com/money/2018/jul/16/im-65-and-my-interest-only-mortgage-is-ending-what-can-i-do and reverse.mortgage/eligible-vs-ineligible-spouse.

I too had an interest only mortgage and the plan was always to sell and downsize in plenty of time before the mortgage ended(which was this coming September). House was duly sold and I found that I couldn't even afford a smaller property in my area as prices have shot up. But I did buy a smaller property 20 miles away (cheaper and I had become a cash buyer) which is fine and I now have some money in the bank too.
OP, you really need to act soon. Good luck with it all.

You will feel a big sense of freedom when the mortgage is off your back.
I'm sure this is true.

Daisy It seems your DH, is one of those people, who will not read the writing on the wall when it conflicts with what he wants to do. This is a major problem, blind optimism in the face of disaster can sometimes win the day, but not often.

You need to gather all your skills to convince your DH to put the house on the market and sell it while you have control and can make as big a profit as possible to fund your (mortgageless) next home.

I suspect your next problem will be your DH having an over optimistic idea of what the house is worth and wanting to put it on the market at a price that is unrealistic.

You will need to look for a quick sale so the price needs to hold the balance between being low enough to attract buyers and help you make the maximum profit. I suggest you get three agents in to value it. Normally the rule is take the one with the middle value. I suggest you go with the one suggesting the lowest price.

Downsize. Honestly it is the only way.
We did this when OH was only 42 as he was unwell and we knew that finances would be tight for the future because he would not be able to work full time
I cannot begin to tell you the joy of being debt free whilst facing all the changes we had ahead... and 3 young children in the mix too.
You will feel a big sense of freedom when the mortgage is off your back. Get that OH on board with it ... he is being very silly indeed.

Grannytomany - it seems he was very lucky with a council property - they presumably could have argued that he'd made himself homeless.

My brother in law ignored letters from his mortgage company at the end of his interest only mortgage because he truly believed that as long as he continued to pay the mortgage interest each money they’d leave him alone. He wouldn’t listen to any advice and even when repossession action was taken against him and the court gave him three months to repay or have the house repossessed he still did nothing until the very last minute when he was was forced to sell the house for 60% of its market value in order to settle the mortgage and avoid repossession. So he lost the 40% equity he’d have got if he’d been sensible and put the house on the market in good time to settle the mortgage when it came due. He’s now in council acccommodation.

I hope you can persuade him Daisy183.
🤞

Thanks to everyone for your helpful comments. I have been at work until after 6 for the last few days, and so have not had much time to actively market the property, but am finding the information being put forward on this thread to be very useful.

David49 - I appreciate your advice especially about not remortgaging because of our low income.

JdotJ - this was a first marriage for both of us. Dh in particular was considerably older than average and has spent much of his life being single. I suspect he has never fully adjusted to the responsibilities of being in a marriage. He spends most of his time in social activities with his friends especially since he has retired.

Madeleine 45 - Yes, I would certainly prefer being on my own rather than continuing in this uncertain, stressful situation.

I agree that the notion of our daughter taking over the mortgage is morally wrong and financially impossible on her graduate starting salary.

Downsizing is still my preferred outcome.

It's grasping at straws for him to try and get his daughter to start paying money. Even if she's on several thousand pounds a week- which she probably isn't.
It's also dishonest trying to keep a business going with loans on the home without the partner's/ wife's knowledge.
This is very selfish thinking - and that's ok if there's no partner/family to think about. But there is.

I used to get reminders from the building society about the need to have something in place to pay off the interest only part of the mortgage at the end of the term. This worried me as I took on the mortgage after my divorce and the 'means to pay it off' had been a pension of my ex husband's. Whenever I overpayed a bit when I had money to spare I asked for it to be taken off the interest only part not the repayment part. Eventually I rang them up as an overpayment had been taken from the wrong part and after a chat with them they converted the whole mortgage to repayment. Such a relief!
I hope to downsize as my mortgage still has over 9 years to run and I'll be 79 when it ends, but at least I am paying it off little by little in the meantime. Once the term ends you are liable to pay off the whole balance and the lender is not obliged to lend to you again, especially if you are older. I wasn't able to get my ex's name off the mortgage even though I was given the equity in the house as my settlement, as I couldn't afford the repayments according to their rules. The fact that I'd been making the payments for a few years was irrelevant. When I paid it down to what they said I could afford they then pointed out that I would be retiring soon and had to prove I would have enough income then. I couldn't do that, so ex is still named on the mortgage as guarantor. I could probably get his name off now but see no point as he managed to buy a house with the help of his mother and taking his name off my mortgage would probably incur a fee! Of course if he wanted that to happen I'd be happy for him to pay the fee. My income increased slightly when I retired so I guess it woiuld be possible.
I'd advise checking with your lender as downsizing, though disruptive, is a far better option than being reposessed!

We had an interest only payment mortgage which was due earlier this year. For a couple of years prior we had quite a few letters from our lenders asking us how we were going to pay off the outstanding amount. OP must have had letter which she needs to show to her DH.

Your husband is hiding his head in the sand. As other posters have said, you cannot ignore this or your house will be repossessed.

My mother took out an equity release mortgage about four years before she died and just after my father died. I am an only child and she did not tell me she had done this. She was also in the early stages of dementia. I found it difficult to believe that the lenders (Aviva) would not have questioned whether she had discussed this with her children. I am only child.

It wasn't about the money for me. In the end we had to sell the house as she went into care. The amount of interest accrued over four years was horrendous.

I do think equity release is an option, especially if you have no-one to inherit, or don't want anyone to inherit.

OP needs to get this sorted asap before things get much worse.

A friend has recently renewed her interest only mortgage at age 72. The idea is that the outstanding sum will be recovered on the eventual sale of the house. So if you can continue to service the debt, it’s not an unreasonable position - although the debt to equity ratio is quite high. Will the equity you are left with be sufficient to buy somewhere else to live? Or will you be having to rent? You are still very young at 62, and you need to think hard about how you’re going to secure your future.

Ah - I see you have talked to them.

Is this all in joint names?

Your partner seems to be burying his head in the sand and I am sorry you find yourself in this situation. But he needs to crawl out from there soon or you will both find yourselves with no roof over you heads.

Boot him up the backside!

The most important and simplest thing is for you to hold a conversation with the mortgage company. Make an appointment to go in and talk to them. Your personal position will then be clear. I am hoping that their letters are not just being ignored!

Show your Husband this post 🙂

So sorry to hear that this is happening to you Daisy183. Your husband must have originally have had some sort of insurance or endowment policy which was intended to cover the mortgage. I'm surprised that he was allowed to remortgage the property without something like this in place.
I agree that selling the property and moving to somewhere which you can afford to buy with the capital is your best solution. Equity release, with compound interest, is much more tricky than many realise.
Letting the mortgage company repossess the property would have been so risky, odds are that they would simply have put it up for auction and would not have got anywhere near the market value, leaving you with little capital to buy your next property.
Incidentally we did consider taking out a mortgage on our rental property when we were both in our 60's and were turned down flat. You have to have a guaranteed income such as a salary or an annuity for them to seriously consider you.

Even thinking of using his daughter to bale him out of the problems he has caused is appalling.

I truly hope your DH listens and doesn’t allow what happened to the business happens to your home.

Well done you for trying to take action, it does seems as if you are the more proactive, practical one.

Act now, whilst you still have choices.

Of all the ideas the suggestion of your daughter buying the house is bonkers, unless she has an extremely good job how will she? As others have pointed out this isn’t a great idea as you two will no longer own the house.

My first boss told me to always communicate with the lender if you have difficulty paying. Never ignore letters regarding arrears. He was sad that the person in his office was going to lose his home as they had written to him for 18months and had no reply. They had now started the repossession process. It was a building society and I was a junior clerk at 16. His advice has stayed with me all my life through good times and bad, and when we couldn't pay the full amount of our mortgage due to OHs company folding. We paid interest only plus £20 a month off the arrears and kept the house until OH found another job.
OP keep talking to your lender and best wishes on sorting it all out. Hopefully you will sell quickly and clear all debts.

Daisy183

Thanks to everyone for all your advice. I printed out GSM's reply to my post and showed it to dh. He does now seem to be coming around to the possibility of our house being sold now, and is no longer as aggressively opposed to it as he initially was.

Dh was initially employed in hospitality management but left to follow his dream of opening his own business years ago. The business had its ups and downs. During bad times he remortgaged our property to fund it. He refused to sell the business and the landlord eventually took the commercial premises back when the rent was not paid.

I will be contacting estate agents shortly. Our daughter, our only child who is in her early twenties, is supportive of the house being sold. Dh has suggested that she take on the mortgage (his friend has done similar with his son) but she is not keen on the idea and neither am I. She has only recently left university and should not be tied to such a large financial commitment at such a young age.

Sorry to sound incredibly intrusive Daisy but is this a second marriage for your husband (and possibly you) as you mention your only child is in her early 20s and your husband is 72 ?
If so, do either of you have children from previous relationships who could talk to dh regarding the muddle you are in (he has put you in) ?

Daisy, sorry to hear of husbands business failure causing the problem, I know many others, including my Brother in Law who thought they could make money out of hospitality and failed.
Overheads are too high and customers fickle, we ran a restaurant for 13 yrs, but it was a free house, the trading broke even, but we sold well, so it was worthwhile

Just playing devils advocate but have you thought of telling your husband that if that is how he intends to remain then you want to split up and have your share of the house etc and that you will move and live in the way you want to do. This could shake him up to sort out his priorities. What is more important ? Staying in a specific house on his own or still having a marriage and a partner? It might be worth you speaking to a solicitor and see how the land lies if you were to do such a thing. Then you will know exactly where you stand and what you might do. It just might shake him up and make him look at the situation properly. At worst you have spent some money getting advice, but at least you will then know the legal situatuion and be able to decide what is the best way for you to proceed, and also understand what may happen if y ou do not resolve this situation. Good Luck whatever you do. Personally I could not live with this hanging over my head and not knowing what may or may not happen, The most important thing is to look at all the information you now have and decide what is the best way for you to go ahead. Hopefully it will be what you both want to do, but in the end if he will not even look at meeting you in this situation you would be better on your own than ending up part of a horrible drawn out stressful situation.