Our Buy To Let's are in negative equity, can we extend the terms beyond our retirement ages?

Posted on 10 June 2013 by Caroline


My husband (52) and I (48) have 5 interest-only btl mortgages to the value of circa £750,000 (property value c. £185,000 which is low due to property price dip) generating turnover of c. £67,000 with combined annual interest-only mortgage repayments of c. £21000. Our own property is valued at c. £350 000 and is mortgage free. We're both employed but after retirement will have combined pensions of c. £14 000 plus state pension. We were planning on the property income to boost our pensions but what are the chances of us being able to continue with our interest-only btl mortgages beyond retirement age, please?

Caroline,

The short answer is that you can carry on with the Buy To Let mortgages until the end of their stated term, and if that happens to be after your retirement date, then that's ok. The problem will be if the properties are still in negative equity when the terns are ending, then you would need to talk to the lenders to see whether they would be prepared to continue with the mortgages. I would suggest that you contact the lenders as soon as possible.

Lenders are showing high levels of forbearance (leniency) at this current time, and it's not as if you been missing payments or the rent doesn't cover the mortgage.

This is likely to be a tricky area for the lenders concerned, and they would most likely look at it on a case by case basis.

It would be worth suggesting that you use some of the net rental income to start to reduce the capital balances now, as this will help you in the longer term. The level of negative equity is obvioulsy very high. When did you last have the properties valued? Without knowing the actual area involved it's difficult to comment.  

As already mentioned though, the most important thing is to contact your lenders sooner rather than later.

Regards,

Simon

simon.collins@johncharcol.co.uk

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