Attempt to clear 2 split mortgages by retirement date

ceoldude

Registered User
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Asking for a "friend" in a medium-term sticky situation.

I am trying to help an anxious couple 60s with 1 income. No qualification for any state support. No prospects of any additional income.
They have 2 split mortgages with one lender (4 portions, 2 warehoused at 0% and 2 being paid down at 4.5%).
Both requiring expensive mortgage protections.
On their current path, they would have a six figure total mortgage balance outstanding by the date of retirement of the single earner.
I am trying to help them on strict budget to accelerate and overpay to clear down as much as possible to avoid this situation.
There is a lump sum in a PRSA which could assist to get to a zero balance by retirement date. (tax math factored in)
They will look at downsizing and moving to a lower cost of living area if necessary.
They ideally want to steer clear of PIPs, legals and courts.

My initial questions that come to mind are along the lines of:
Is it nuts to wipe out the PRSA in favour of avoiding PIA route? i.e. paid for house but only the state contributory pension as income.
If they use a lump sum to clear down one mortgage (and mortgage protection cost) can the lender alter the terms of the other mortgage to take advantage of the perceived additional repayment capacity?
Is there any point in attempting to negotiate on their behalf using the lump sum for some write down?

Interested in any helpful thoughts or suggestions
 
Can you give the numbers?

Is it two mortgage accounts on the one family home?

What is the value of the home?
What is the total amount of the mortgages?

What is the remaining term of the mortgage?

What is their income?

What is their pension situation?
 
Can you give the numbers?

Is it two mortgage accounts on the one family home?

What is the value of the home?
What is the total amount of the mortgages?

What is the remaining term of the mortgage?

What is their income?

What is their pension situation?

Hello Brendan, thank you for your reply.

Two mortgages on one family home
Market value 270k
Total outstanding 157k (131k +26k)
I don't know their remaining term but at current repayments, mortgage protection something impossible like 34 years on Karl Jeacle.
Income 37k gross, 32k net
Pension pot 40-50k
Savings 6.5k
 
Market value 270k
Total outstanding 157k (131k +26k)

There is not much that they can do.
(And not much we can do when you won't give the amount of the warehouse or the monthly repayment)

They should see if there is a lower mortgage rate than the 4.5%.

They should continue with the agreed repayments.

When they come to the end of the term, they will owe - say €100k on a house worth €300k.

Pepper may well do a deal with them to put it on interest only, so they will be paying €400k a month.

Even if Pepper refuses a deal, there won't be much that Pepper can do if your friend keeps paying at least the interest.

At some stage, they will be able to switch to another lender and get a Life Loan. So they wouldn't have to pay anything if they don't want to. But the mortgage would, in time, rise to the value of the property.

Brendan
 
Hi and thanks for your reply.
They still have a number of years before retirement.
The pension is only one of a list of methods of getting the mortgage down to zero.
Mortgage overpayments, aggressive budgeting, attempts to increase income, sale of any unnecessary possessions car boots sales etc.
 
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