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    • Yorkshirelass123
    • By Yorkshirelass123 10th Sep 17, 9:55 AM
    • 3Posts
    • 0Thanks
    Yorkshirelass123
    Swap to interest only with possible redundancy
    • #1
    • 10th Sep 17, 9:55 AM
    Swap to interest only with possible redundancy 10th Sep 17 at 9:55 AM
    I am getting divorced and have now got the mortgage in my own name. Ex will get a percentage of equity when house is sold. There is no pressure to sell but may do so in next 5 years or so. My new mortgage is repayment for £70k over 15 years. Value of house is about £180k. A friend suggested I should get an interest only mortgage to help reduce monthly outgoings by about £400 a month. There is enough equity to cover mortgage when i sell the house. Problem is I think I'm about to be made redundant, do I act now to get mortgage transferred or wait until I get redundancy notice? Do I have a legal obligation to inform lender of my work situation?

    Any help would be greatly appreciated.

    Thank you in advance.
Page 1
    • ACG
    • By ACG 10th Sep 17, 10:29 AM
    • 15,771 Posts
    • 8,068 Thanks
    ACG
    • #2
    • 10th Sep 17, 10:29 AM
    • #2
    • 10th Sep 17, 10:29 AM
    If the lender asks are you aware of any possible changes to your circumstances then there is an argument that would be the place to mention it. Others would say nothing is confirmed and so you would not need to mention it (ie if you knew you were going to get a pay rise but there was nothing in writing, a lender would not accept it).

    Not many lenders do interest only where the property is not valued at around £500k and your income is around £70k, so your options will be limited.

    An alternative may be to extend the term as much as possible?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • glosoli
    • By glosoli 10th Sep 17, 10:43 AM
    • 673 Posts
    • 387 Thanks
    glosoli
    • #3
    • 10th Sep 17, 10:43 AM
    • #3
    • 10th Sep 17, 10:43 AM
    If you were to be switched to interest only it would likely be through your existing provider as part of a financial difficulty solution, rather than an actual mortgage application. You should maybe contact them and see how they can assist.
    • Yorkshirelass123
    • By Yorkshirelass123 10th Sep 17, 12:12 PM
    • 3 Posts
    • 0 Thanks
    Yorkshirelass123
    • #4
    • 10th Sep 17, 12:12 PM
    • #4
    • 10th Sep 17, 12:12 PM
    Huge thanks for your quick replies. Do lenders tend to offer switching to an interest only as part of a financial difficulty solution? If so, then I'll wait until I've received redundancy notification before contacting them, but I'm just concerned that I may miss the chance to swap to an interest only whilst I'm still employed. Hope that makes sense!

    Thanks again.
    • glosoli
    • By glosoli 10th Sep 17, 12:20 PM
    • 673 Posts
    • 387 Thanks
    glosoli
    • #5
    • 10th Sep 17, 12:20 PM
    • #5
    • 10th Sep 17, 12:20 PM
    Regular residential mortgages on an interest only basis are very few are far between now, and the criteria tends to be outwith the scope of a regular applicant.

    These would include, but not limited to:

    1) House value
    2) Mortgage balance
    3) Income criteria
    4) Repayment strategy ticking all the boxes

    There is no harm in trying but the fact you may/will be facing redundancy will likely mean the lender will be unable to take your employed income into account unless you are able to produce a letter of employment from a new employer and the affordability is calculated off of that.

    In my experience in terms of financial difficulty, there is a number of methods they can use to assist, whether it be interest only for a period of time, or whether it be a repayment holiday entirely. They will take you through a budget planner to decide on the best solution.
    • getmore4less
    • By getmore4less 10th Sep 17, 12:41 PM
    • 30,248 Posts
    • 18,088 Thanks
    getmore4less
    • #6
    • 10th Sep 17, 12:41 PM
    • #6
    • 10th Sep 17, 12:41 PM
    I am getting divorced and have now got the mortgage in my own name. Ex will get a percentage of equity when house is sold. There is no pressure to sell but may do so in next 5 years or so. My new mortgage is repayment for £70k over 15 years. Value of house is about £180k. A friend suggested I should get an interest only mortgage to help reduce monthly outgoings by about £400 a month. There is enough equity to cover mortgage when i sell the house. Problem is I think I'm about to be made redundant, do I act now to get mortgage transferred or wait until I get redundancy notice? Do I have a legal obligation to inform lender of my work situation?

    Any help would be greatly appreciated.

    Thank you in advance.
    Originally posted by Yorkshirelass123
    How did you get £400pm

    even if it was 0% that would be £389pm at 2% its £335


    if you have just switched and there are ERC then you are stuck with your current lender.

    15y @ 2% is around £450, extending to 30y £260
    • Yorkshirelass123
    • By Yorkshirelass123 10th Sep 17, 5:01 PM
    • 3 Posts
    • 0 Thanks
    Yorkshirelass123
    • #7
    • 10th Sep 17, 5:01 PM
    • #7
    • 10th Sep 17, 5:01 PM
    Hi

    I currently pay £450 per month, fixed for 3 years. Using a mortgage calculator, it said an interest only mortgage for £70k mortgage over 15 years would be £57 a month (fixed for 2 years) then going up to about £120 per month after that. I might have got my sums wrong but I'm sure that's what was quoted.
    • AnotherJoe
    • By AnotherJoe 10th Sep 17, 5:08 PM
    • 7,579 Posts
    • 8,181 Thanks
    AnotherJoe
    • #8
    • 10th Sep 17, 5:08 PM
    • #8
    • 10th Sep 17, 5:08 PM
    £70k at £57 a month is roughly a 1% mortgage rate. Is that what your current mortgage is?
    • RedFraggle
    • By RedFraggle 10th Sep 17, 5:36 PM
    • 489 Posts
    • 1,118 Thanks
    RedFraggle
    • #9
    • 10th Sep 17, 5:36 PM
    • #9
    • 10th Sep 17, 5:36 PM
    I had to declare on my motgage application whether I was already aware of any potential changes in circumstance workwise. I would assume if it's been announced by your employer rather than being a hunch that not to declare it could be seen as fraudulent.
    Officially in a clique of idiots
    • getmore4less
    • By getmore4less 11th Sep 17, 9:15 AM
    • 30,248 Posts
    • 18,088 Thanks
    getmore4less
    Hi

    I currently pay £450 per month, fixed for 3 years. Using a mortgage calculator, it said an interest only mortgage for £70k mortgage over 15 years would be £57 a month (fixed for 2 years) then going up to about £120 per month after that. I might have got my sums wrong but I'm sure that's what was quoted.
    Originally posted by Yorkshirelass123

    £70k 15 years £450pm is a rate of 1.986% interest only is £116
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