Mortgage Advice

SideShowJohn

Hi all,

Bit of a long one this, I'm afraid!

In October 2007, I lost my job and my fiance rang the bank (Abbey National) to see if we can lower our payments. They put us on to interest only for 6 months. At this point my Fiance asked if it would affect her credit rating (mine is bad.), and Abbey National said no, because we're paying above a certain amount. So when I found a job in Jan 08, we went back on to full payment of £1375 pm. All was well, until a few months ago when the Abbey rang up my fiance and said that she was in arrears with her mortgage.

This was news to us!! It turns out, and no one had told us, that the shortfall in paying interest only needs to be paid now - I think it was £1200 that they were asking!! We said that we couldn't pay this, so instead, they've increased our mortgage payments to pay off the shortfall!!

I don't know alot about mortgages, but surely I thought any shortfall gets added to your overall amount, spread over the remaining years of the mortgage - can someone clarify this?

I'm about to be made jobless in the next few days so my fiance rang abbey - and this is a peach - to sort out an interest only repayment until I find a job. It turns out that the advice given in Oct 2007 was incorrect - being put onto interest only tells the bank you cannot make repayments, so your credit file will be affected, and that the conversation in Oct 07, according to their system, never transpired!!:mad:

Can this be correct?? Surely not!! We were told that it would not affect her credit rating!! What can we do? Apparently, Abbey National have stopped their mortgage support and is only offered to people on benefits!! !!!!!!??

Can anyone advise us of what to do please, particularly in the light of me being jobless again. As an aside, we have found Abbey National to be unhelpful in all the time that we have had a mortgage with them, and we definately will swap when our mortgage term runs out in August. It also sounds like that even though the banks help create this dire mess the economy is, they still want their money, under their rules and their terms, which seems to be different every week!

Thanks

Dan_1976

Not sure what they have done. Are you sure it was interest only and not a reduced payment plan?

Interest only is interest only, when you put it back to repayment it would be recalculated over the remaining term.

Maybe you need to clarify with them what they actually did. If you wrote to them just asking for interest only, this would not go against you on your credit file.

SideShowJohn

We rang up Abbey National in Oct 07 and they offered us an interest only repayments.

Whats the difference and what are the implications in regard to your credit score of each one?

How many times can you ask the bank to pay interst only? Because we've been told that we can't do it again!

As silly as it sounds, what are the implications of missing/making reduced payments on your mortgage?

To put it bluntly, what help can I expect from our mortgage providor, because at the moment they are not making it very easy for us!

Many thanks.

Trying_to_be_good

Many lenders have stopped allowing borrowers to swith to interest only due to falling house prices.

If you asked to reduce your payments in Oct 07, that's different to specifically switching to interest only. It's not a case of being allowed to do it once/twice - it's all at the lender's discretion.

Have you dig out all the paperwork and checked to see what happened? It might shed some light on what process they followed.

If you miss payments, or make insufficient payments, it's counted as arrears and is a black mark on your credit report. It will make it difficult to get a new mortgage and other credit.