In trouble, can I break my deal early to change rate?

Bigsqueeze

Hi I have an interest only fixed rate mortgage on a house we bought on the crest of the credit wave so is in negative equity of about 30k (enough to bancrupt me as I'm sure the bank wouldnt accept that shortfall if we sold - which we dont want to)

I am about to be made a single mum and though I earn well I am going to get into trouble very quickly if my partner doesnt pay his half - which I think is highly likely as has only paid about half his share of the bills since the start and has several defaults that I have discovered since we started a financial relationship, and to be honest he really doesnt care and I know, if it came to it the bank would chase me for the money as he has no money.

I have exactly 1 year left on my fixed rate, and obviously I have no deposit, I am with the mostly government owned bank, and I want to know if there is cny chance that they will let me come onto a better rate as they have them for existing customers on the website listed as not requiring a desposit. These rates arent great, but it makes a huge difference to me I am on 6.28%.

They have told me that there are no options for me when I tell them I may get in trouble very quickly and if we could just agree a lower rate of interest, I could probably survive without missing a payment, as I do earn well and am in a fairly stable job.

I find this baffling as we are told lenders are supposed to try to at least come up with an option to prevent repossession - I am calling them before this happens so that they need not lose thousands of pounds and me and my son our home - is there any hope?

luckyfool

They are not going to just waive penalties and reduce your interest rate. If you confirm your circumstances you might be able to negotiate a reduced payment or they might be willing to put you on interest only for a period (e.g. a year).

Bigsqueeze

I havent asked them to waive the penalties, I would have to have them added on though as I dont have 3% if they required the full early repayment fee.

I am already on interest only, so thats not an option anyway - I just want to come out of my deal early onto a better rate if it gets to the stage where I am going to default. I dont think its right that I should spend 2 hours being passed to different departments nobody agreeing which one is the right one to speak to, with the response that 'wait until you default' it just seems ridiculous that a government backed lender cant show a degree of flexibility to enable a high risk loan to continue earning them money rather than losing them thousands - do you see my side? I have 11 months left on my deal.

'Wait until you default' isnt doing what they can to prevent reposession - for me, or them. And from what I know I have to be made redundant to get any other help from government schemes (and even then i may not be eligble due to neg equity), as I said, I earn well so tax credits are useless to me - as a single mother when he walks away I am not eligible for any benefits.

ILW

Already interest only.

Thrugelmir

You should make an appointment and go in to meet the bank.

It would take very little to tip you over the edge. So better to be pro active rather than waiting for events to unfold.

Could you rent a property for less outgoings than your mortgage?

Cannon_Fodder

They've got enough already in arrears to deal with...If they amend your interest rate, in the spirit of "something is better than defaulting", they'd have to revisit the other 400,000 people who are currently in arrears...

Going into arrears is a very early stage, it starts a six-month process.

So, while its obviously best not to miss payments if possible - and you need to exert pressure on the partner to pull his weight - its not time to panic, yet.

Get over to the debt-free and mortgage-free boards, to see where you can cut costs or improve your income.

Caz3121

Bigsqueeze wrote: »

....as they have them for existing customers on the website listed as not requiring a desposit. These rates arent great, but it makes a huge difference to me

most of the banks will only do a mortgage for up to 95% LTV (and a lot lower LTV to get the better deals), you are looking for 100%+ which is just not available in the current climate. Being on interest only means your LTV will not improve and you will be reliant on the market improving...if you can manage through to the end of the term you will probably find there will be little in the way of deals open to you at the end unless the market has put you into an positive equity

sorry it is probably not the answer you are looking for