Mortgage Shortfall

More and more over the last 12-18 months we have been receiving enquiries from people who are coming to the end of their Interest Only Mortgage and will have an outstanding Mortgage balance.

Common reasons for a Mortgage Shortfall are:

  1. An endowment did not perform as expected,
  2. There was no “exit strategy” put in place to clear the Mortgage at the end of the term,
  3. The “exit strategy” was cancelled for one of any number of reasons.

What can I do if I have a Mortgage Shortfall?

We believe Mortgage Shortfalls are going to become more mainstream over the next few years. A couple of Mortgage lenders have already started to release specialist products to cater for this part of the market.

There are now Mortgages available with no end date for instance. Mortgage lenders are now accepting pension income more and more as evidence of income, usually proof of the pension payment or a pension statement is required.

We are also seeing Mortgage lenders increase the age at which Mortgages need to be redeemed increases from around 65-70 up to 70-75. So if you think a few extra years on the term would allow you to clear the Mortgage, that is potentially an option.

There are also other options such as Equity Release Mortgages/Lifetime Mortgages. Providing their is enough equity in your home, you can release money from your home to clear your Mortgage. You would still remain the owner of the property but the Equity Release company would become the owner once you pass/move out and would have a charge over the property in the meantime.

We do not advise on equity release/lifetime Mortgages, although we can refer you to a company who does. There may also be tax and benefit implications on these types of Mortgages.

There are options

It is important not to worry and not to leave it until the last minute. There are usually options out there, but sometimes there is a little more work involved depending on your circumstances. We are happy to discuss your options and include your family in those discussions if you wish.

If you would like to have a chat, please do give us a call on 0161 327 2799. The call will just be an initial chat to give some facts, figures and a brief overview to see what we think we can do for you.