This is a tricky one...

watcher27

Right, we'll do that then, assuming Northern Rock accept our application!:eek:

I did ring up last week to see what the payment's would be, and the lady did say they would be sending me a form in October to reapply to continue my interest only option, so fingers crossed!

Currently we pay around £460 but its still jumping £300 as our deal ends

I dont think my mum will charge actual rent, but i will insist on paying half the council tax and our share of the food & utility bills etc. We will still be saving money though.

Another question, if we move in with mum (& step dad), would it be best to revert back to full repayment at £1035 a month? We'd be getting around £650 -£700 rent. Or remain at interest only & saving that extra money?

dunstonh

Another thing i forgot to reiterate, is that my mum would never have had to pay a penny, all payment's etc would have be paid by us. But i understand now, that to get the money, my mum would need to technically be able to make the payments, even though she would'nt be paying them?! But anyway, not going down that road...

Your mum would have to pay. It would have to come from her account. You could then pay into hers to cover it. However, what happens when interest rates go back up again and the monthly payment returns to the long term average? If you cant afford a £600 increase now then how are you going to afford a similar level of increase in a few years time? You then have the problem that you cant cover the payment to your mum and your mum ends up paying the mortgage. Can she afford it?

My dad has offered to use some of his pension money

Has he taken the pension yet or is it still accruing? early commencement of a pension usually means taking less than you would if you left it to the scheme retirement age.

opinions4u

Another question, if we move in with mum (& step dad), would it be best to revert back to full repayment at £1035 a month? We'd be getting around £650 -£700 rent. Or remain at interest only & saving that extra money?

I would aim to reduce debt. But if you have other debts (loans, cards etc) at higher rates, there's a case for reducing these debts first, espeically if you intend to retain your home.

CLAPTON

you need to look into the issues of renting out the property.
you should ask your mortgage company for permission although many people do not.
you need to look at the legal requirements in particular gas safety certificate
house insurance
the tax situation although you probably won't be making a profit
rental agreement

ItMightBeUsefulOneDay

watcher27 wrote: »

One option we have, that again was mentioned by the estate agent, was to rent our house out for around £700 and move back in with my mum temorarily till either i get a better paid job or my wife can return full time etc.

This would be ideal but you may struggle to persuade the mortgage lender to grant permission to rent the property out. You lose nothing by asking though so give them a call. If they agree it's likely to be at a higher interest rate and have some form of up-front admin fee (those bankers need their bonuses after all). Then you'll need to have some contingency for rental voids, repairs and other such items. Please don't become a landlord without researching the potential pitfalls - it's not as easy as it sounds and there are many legal nasties that you must be aware of.

Another residential interest only would work but, again, banks are tightening their books too and you may find they're unwilling to carry the high risk of your mortgage. Ultimately you should be able to afford both the interest and some way of repaying the capital of the loan. They may ask to see evidence of your repayment vehicle.

Get yourself over to the debt-free wannabe forum and post up an SOA. There's lots of people there who can help you trim your spending - if you're committed to keeping the house you're going to need to make some serious sacrifices (around £600 per month's worth going on your figures). Ultimately, only you can decide if this is worth it (or even possible).

watcher27

dunstonh wrote: »

Has he taken the pension yet or is it still accruing? early commencement of a pension usually means taking less than you would if you left it to the scheme retirement age.

Not sure, he is retired and has been for a quite a few years. He sold of all the shares in his company he owned etc. He has just turned 60 but i don't think he is drawing his pension yet. He bought a holiday lodge up in the lakes last year, lucky sod :rotfl:

Thats the kind of life i want, but i feel i'll never get there and be working till im an old man shuffling round B&Q

I understand, about the interest rates going back up and that's the part that worries us the most!
Our mortgage was originally with Halifax as our home was "part buy part rent", with a 75% share. But we pushed after a couple of years and got the rest of the house, which is what our current mortgage with Northern Rock is for. Our original payments were £1265, which were perfectly affordable for us at the time, oh how things change

We owe £5000 on a halifax CC still, but it's fixed for the life of the balance at 5.4%, we have reduced this down form over £10000.
And we owe around £350 for our HFC/DFS sofa we got when we moved in(0%) this will be the first to go as its £43 a month and such a low amount!
The CC's minimum payments are around £60 a month, so can manage that in the mean time.

cardinalbiggles

If you are going to struggle now things are going to get 10x worse when interest rates start to creep back up again, and they will.

poppy10_2

dunstonh wrote: »

Your mum would have to pay. It would have to come from her account.

Not necessarily

watcher27

cardinalbiggles wrote: »

If you are going to struggle now things are going to get 10x worse when interest rates start to creep back up again, and they will.

I know :eek:

What about an IVA? Part of our mortgage, around £16000, is made up of an unsecured loan, added to the £5K mentioned on the CC would this be enough to qualify us for one? Another option perhaps?

I read somewhere that having an IVA protects you from repossesion?

dunstonh

poppy10 wrote: »

Not necessarily

Technically its possible with some lenders. However, it doesnt change the fact that when interest rates go back up and the OP cant afford to make the payments, it will be his mum they come after for the debt. Not the OP.