Interest only mortgage - Help

Great_Hairdresser

Evening all

Can anyone help please?

I have an self cert mortgage for £93K (not much equity left) and cards loan etc up for £15K, Everything is in my name although OH contributes quite substantually.

My OH has just been made redundant, although he doesnt intend to be out of work for long - I am a panicer.

What I would like to know is:-

If I defaulted on any of the unsecured debt how would I go on getting a mortgage when my current deal is up?

Would I be given a mortgage even if I dont default as I have heared self certs are now unavailable.

I am worried sick I wont get another deal/mortgage and be thrown out of my own home.

I have always gone thru a friend who is a mortgage advisor and have been pretty clueless ( I am trying to get more with it now)

Thanks in anticipation

_Andy_

Why would you need a self-cert mortgage? Surely you can prove your income?

udydudy

Hey Hairdresser, do not fret, firstly you need to tell us exactly which lender and what your mortgage is? In that what i mean is all mortgages are normaly 10,15,20,25,30 years. what confuses people is the initial period. like mine was an interest(below base) for 2 yrs(taken in 2007) but the actual mortgage was 25 years from 20007. so I had the honeymoon period until a few months back when I was nearly paying nothing(interest only remember)

but now is the time for a reality check. I am paying the lenders SVR as they would not offer me any new deal. I would expect if you read your mortgage papers, you would find that it would tell what you pay after your initial period ends.

if you go to your mortgage lenders website it would tell you the current SVR(standard variable rate) that you would go to once your intial period ends. This is applicable to the remaining period of your mortgage.

Dangerous thing is that when you are on SVR when interest rates go up, the lenders could raise interest rates(SVR) more than the rise in Bank of England interest rate. but well what can one do!!!

So even if you default on your unsecured debt, you may not get a good mortgage deal but as long as you do not default on your mortgage the lender would not throw you out.

but then if you have equity in your property(which you confirm is not there) the unsecured lenders may not chase that avenue). though it may be a good idea to talk to them for a payment agreement as they could render you bankrupt.

I am sure there will be more informed MSE members who would advise on this matters.

Let_Us_See

If I defaulted on any of the unsecured debt how would I go on getting a mortgage when my current deal is up?

When does you current deal (not overall term of mortgage) end? When it ends and by doing nothing, the interest rate should revert to the lender's Standard Variable Rate (SVR). However, some self-cert lender's imposed a higher rate than SVR and it is important to either check your mortgage offer or contact the lender to confirm what rate will apply.

Would I be given a mortgage even if I dont default as I have heared self certs are now unavailable.

Your options will be severely limited as self-cert lenders have virtually disappeared and until you can prove income (and eventually you will have to prove income) you might have to remain with your current lender. Hence, the importance of checking the rates as mentioned above.

I am worried sick I wont get another deal/mortgage and be thrown out of my own home.

See above comments.

I have always gone thru a friend who is a mortgage advisor and have been pretty clueless ( I am trying to get more with it now)

Clueless? What can I possibly say?

koexelek

_Andy_ wrote: »

Why would you need a self-cert mortgage? Surely you can prove your income?

It might come as a shock, Andy, but some hairdressers have been known to not declare all their income to the taxman:eek:

If I didn't know better, I'd think they were didn't like paying tax or something :cool::D

Great_Hairdresser

Thank you for all your helpful comments.

I DO pay alot of tax, but as I am self employed and my income fluctuates from month to month, hence being advised to get a self cert mortgage (hairdressers are not the only people who have been advised to do this)

I think this site is invaluable and have had some great advice, but why do some people think posters are always on the con and trying to get away with paying for things.

_Andy_

I don't think you're "on the con" - my point is that a lot of people think they need a self-cert mortgage (and therefore pay higher rates as a result) when they don't - not moneysaving at all!
Your income may fluctuate but as you must have accounts you have proof of income which means there's no need for self-cert/higher rates.

Let_Us_See

GH - oh dear, why so defensive, I do not think anyone is saying you are a con artist?

Used properly true self-certs have a role (be it a small one) to play in the mortgage market. In the past self-certs have been abused by all and sundry, not because they could not prove their income, but because their income was insufficient for their mortgage needs.

You mention that you pay a lot of tax, so presumably you have accounts and complete an annual tax return? If so, why the need to self-cert? See what I mean?

Great_Hairdresser

I do have accounts, but have always delt with a financial adviser I took what he said to be correct. I assumed (more fool me) I was getting the best advice.

I am now more in control of my finances hence my original question