What would you do if you realised that your mortgage was not going to be paid off?

Question

before you reached retirement age?

Answer 1

Depends on how much income I would have coming in during retirement and how much was left owing.

1. If pension income could pay the mortgage and have enough left for expenses no worries, just keep paying the mortgage.

2. If pension income isn't enough and there is a lot of equity, sell the house, take the equity and buy a smaller house or invest it and find a place to rent.

3. If there is a lot of equity and small mortgage but the payments will cramp my style I would look into getting a line of credit and use the line of credit to pay off the mortgage. Then you have a line of credit to pay and not a mortgage. Since line-of credit is usually minimum of interest only payments the monthly payment could drop considerably. True you will never pay it off...but let your estate worry about that :)

4. Talk to the bank about a reverse mortgage. Let's you get your equity back while staying in your house. Can be good or bad so weigh the risks carefully.

Hope that helps

Answer 2

I suppose it depends on how soon retirement is? The best way is to pay extra each month. Make sure you have a flexible mortage that calculates interest monthly, most mortgages are now.

Then paying off as little as £20 or £30 a month extra by standing order would, over a year, work out as an extra payment. Most importantly, you would be paying off part of the debt (the capital) and therefore the interest you acrue would be reduced. For every month you pay off, in this way, you would probably knock 2 months of the total repayment time. The more you can afford to pay extra, the sooner your mortgage will be paid.

Use the calculator below, enter your debt, the interest rate and the date when you want to pay the mortgage by. It will then tell you how much you should look to pay per month. (its in dollars, but that doesn't make a difference). Good luck

Answer 3

There is the option of renting a room out! Make sure it is someone professional and clean and tidy. The extra money £300 pcm, could be payed into your mortgage account! Most lenders let you pay 10% extra, and some dont mind if you pay it all back quicker.

Alternatively, put the £300 from your tenant into premium bonds and then let it build up. It will pay your mortgage when you retire.

There is an advantage to keeping a small mortgage going too, it is easier to move money about (move house/borrow more to extend to increase value etc) when you have a small mortgage still running.

I wouldnt worry.

Answer 4

Most mortgages do not have a pre-payment penalty, so you can pay a little more principal each month and dramatically shorten the overall payoff period. If you're planning to retire mortgage-free, I'd recommend figuring out how much extra you need to pay each month to reach that goal. You can use the calculators below at Yahoo Finance to help. Good luck.

Answer 5

Will you be able to afford the mortgage payment upon retiring? If NOT, I would develop a spending plan that allows you to spend every single dollar on paper on purpose BEFORE the month begins. I would find out how much you need to pay every month on the house to ensure that it is paid off prior to retirement.

I would put together a budget that allows you to pay it off PRIOR to retirement. There are free budgeting tools at http://www.josephsangl.com/?page_id=151

If you cannot afford it at retirement AND you cannot pay it off PRIOR to retirement, I would look at downsizing!

Answer 6

Nothing!! I wouldn't worry about it!! If and when I get close to retirement and realise I will not be able to pay my mortgage I would just sell the house and buy a smaller property!!

Answer 7

Consider moving sooner or later. If it was my 'dream home' where I wanted to retire, I'd make extra payments and totally reorganize my finances so that I could save the house. Otherwise, I'd continue working past retirement age.

Answer 8

You are not stating the reason and so it is difficult to advise you correctly. But:

a) If you can afford it at all, increase your monthly payments.
b) If you cannot afford it, but the debt is not increasing, carry on living there. You are gaining from capital appreciation.
c) If the debt is increasing, sell and move to a cheaper place, or let a room and use the income to increase the payments.

Answer 9

Pay at least one additional payment each year - all to the principal. This will pay off your mortgage sooner.

Answer 10

WORRY !!