Looming redundancy.... Mortgage - what to do?

zippychick

Hi All , this is my first time ever stepping foot in this board - so am a little unsure of how to explain this best.

I have a huge amount of information on my SOA post - which explains the terms of my mortgage, and what my full current situation is. Details can be found in this thread

To Summarise it for you
I am being made redundant at the end of Dec
I am getting around £13000 redundancy (net figure, on SOA is gross)
My mortgage is currently as follows
Mortgage - remaining 17 yrs 2 mths. In two parts

£53k - fixed rate 5.95 runs out 30/6/10
£7.5k-fixed rate 4.65 runs out 31/03/2011

I would prefer these together - in June next year, there would be a 1% charge on the £7.5k so I would pay £75 for changing it early.

if i wanted to change the WHOLE mortgage today, it would be upfront cash charge of £682.38 - to change mortgage package to variable for eg

I enquired about extending the term
5 yrs would change mtg payment from £446 to 388 - diff of £58 mth
10yrs would change mtg payment from £446 to 355 - diff of £91 mth

Good idea but not keen to do this unless necessary. I understand the pros and cons of this - extending the term adds more interest longer term as I am paying less of the mtg off . My mortgage would currently be paid off by age 47.I can overpay by up to 10% a year, so 5-6k a year so that's good to know

TMP =-TMP - Is for £47530 - original mortgage amount. Level CI, LI, and Sickness, unemnployment etc. Increases subject to Underwriting. So there is a shortfall there. I wasnt worried about this as have a 4x death in service and final sal pension, but when I lose this I will need to fix that. I am covered on TMP for £550 (app) a month - i dont have the figure to hand exactly

The bank have explained to come to them if I have trouble - and I can extend the term, or go interest only temporarily, or they did mention a product transfer - but i didnt question that more at the time - so can if needs be.

I am currently paying £283 interest, £170 capital

I have an appointment with CAB next week

I am trying to understand what to do with my mortgage. Some have suggested I go IO now while I am not struggling,others to wait until I am.

Any ideas, suggestions, more info required?

Thanks in advance for any help or suggestion.

getmore4less

MY view is reduce the commitment to the smallest amount possible if income is drying up.

So I/O and extend the term. you can over pay later when there is money.

Think about cutting out all discretionary spending

Cash is king till the income increases so preserve it.

But before doing this

Check that any insurance payments will not be effected if you do this.

Also analyse benifits if this will be enough to live on then making the money go further may not help just delays getting benifits where if you just carry on at least some money will have paid off a bit of the debt.


There is no point in touching the fixes unless you get a better deal.

What are the follow on rates for both of these, they may be good trackers, or a SVR that is OK.

speedbird1973

Not relevant to the specific question.. but your redundancy will be tax free under 30 odd grand.

zippychick

getmore4less wrote: »

MY view is reduce the commitment to the smallest amount possible if income is drying up.

So I/O and extend the term. you can over pay later when there is money.

Think about cutting out all discretionary spending

Cash is king till the income increases so preserve it.

But before doing this

Check that any insurance payments will not be effected if you do this.

Also analyse benifits if this will be enough to live on then making the money go further may not help just delays getting benifits where if you just carry on at least some money will have paid off a bit of the debt.


There is no point in touching the fixes unless you get a better deal.

What are the follow on rates for both of these, they may be good trackers, or a SVR that is OK.

have just highlighted the bits I am unsure about? Sorry, am not very aufait with mortgages but trying to learn and understand

As far as I know, when the Fixed rate runs out, it goes on a Standard variable rate - which is today at 3.5 - so if my mtg was on SVR today, the payment would be around £372.54. If i took a fixed rate today over 3 years , it would be apr of app 4.49%

i dont see the benefit of changing the package now - it would cost me 682.38 up front (which i dont have - has to be cash). I would save approximately £567 by doing so, so changing today would only cost me, not benefit me.

benefits - as far as I understand, would be £64.30 a week.

regards tax free - most of my redundancy is - but my 8 weeks notice (built up from 8 years of service ) will be subject to tax and national insurance - and this is clearly stated in my letter

thanks so far.