Reducing Offset Mortgage payments

taptif

Hi,

Having recently finished a full-time contract and currently being unsuccessful in finding another job (thanks credit crunch!) I'm trying to work out how to survive on JSA in the interim.

I have an offset mortgage that I can't take a holiday from that is almost the same as my JSA for the month (and what about the other bills and food?). The lender is saying "go into arrears or draw down on the equity in the house", both of which pile more debt on; and doesn't the arrears option do nasty things to my credit rating? Still a long while to go on the 39 weeks for social security to cover the mortgage.

I've got a few months worth of savings (and I'm skrimping all I can to eek that out) but I'm looking for thoughts on how to reduce the mortgage payments for a while until I get a new job. Any ideas welcome.

Thanks.

Locoblade

Who is the mortgage with?

getmore4less

If you have not offset any savings then the offset bit is not that relevent.

The usual use of an offset with contractors is to build up an offset pot for cash flow during income voids

Interest only is the only way to reduce contracted payments will the lender let you do that or are you interest only alllready.

taptif

Mortgage is with First Direct and is interest only already. Take your point about the offset not having any benefit at the moment.

FD are pointing me at drawing on some of the remaining equity in the house which is increasing the mortgage to pay the mortgage. Not too bad if I can find a new job quickly but no guarantee there in current market environment.

I want to ensure I avoid getting a black mark on my current excellent credit record and minimise any additional debt.

Thanks for your help

silvercar

Drawing on the equity is better than going into arrears, as the former won't affect your credit rating.

If your mortgage is not interet only then change it to IO.

Make sure you claim whatever you are entitled to.

I did think the government had just changed the rules on mortgage support, its now claimable after 12 weeks and to a max of 175k rather than 9 months and 100k.

getmore4less

Had a longer post but forgot to submit and lost the page, so here is a shorter version.

Extending the loan is the same as a hoiliday but you have more control.
Cheapest place to borrow money is the mortgage, if you find cheaper you can offset it anyway.

Review what you could have done different to have given you a bigger buffer

review can you aford this place, interest only and not being ble to save from income suggests not. (might be you were just spending too much elsewhere and this can be soreted when you get a job.)

Also review if selling/renting would widen the job market.

Other income, lodger, partime work, xmas will stretch the savings/mew a lot further

If you extend borrowing will it look like savings and effect potential means tested benifits, can it be hiden in a overdraft like you can with Barclays and the one account.