Switching to Interest Only for a fixed period

Deeks_2

Hi,

I've currently got a mortgage with Santander, fixed rate (currently 4.2%) with a year left. At the moment my wife and I are struggling due to a loss in income (my wife's hours have been cut and my overtime has been stopped due to the company going through redundancies)

It's likely that my wife will get her hours back at the beginning of the next financial year and I should get my overtime back after christmas.

At the moment we are struggling to make monthly payments. Although they are upto date.

The reason for the post is I'm wondering if Santander would consider switching us to an interest only mortgage for a set time? Possibly 6 months to a year.

I know your probably thinking, just phone them and find out

But was just wondering if anyone has gone through this process? What information will I need to hand when I phone them? Is their any negative effect on going down this route?

As we have unsecured loans (credit card and car loan), would they expect them to be reduced 1st?

Any advice you can give would be much appreciated.

Thanks

GMS

Santander will look at each case individually, so what they have agreed for somebody else may not necessarily apply to you.

Call them and explain the situation. They should do all they can to accomodate your request. Switching to Interest Only for a short term is much better than not making payments.

Call them asap to discuss

Good Luck

Deeks_2

GMS wrote: »

Santander will look at each case individually, so what they have agreed for somebody else may not necessarily apply to you.

Call them and explain the situation. They should do all they can to accomodate your request. Switching to Interest Only for a short term is much better than not making payments.

Call them asap to discuss

Good Luck

Many Thanks GMS

Have just spoken to them and found the lady I spoke to very helpful.

She advised that the interest only option is a last resort but has offered a term extension (which is temporary and will be a big help in the short term)

Big sigh of relief

Jackinbox99

You will have to speak to Santander about this one. I asked my lender (Nationwide) the same question earlier in the year and they had 2 criteria they checked before moving a mortgaeg onto interest only.

a) LTV can not be greater than 75%

b) (and this is the bizarre one) the equity in the property after the mortgage has been cleared must be more than £150k.

Now, for me, the first one was not a problem, ive only a 20% LTV on my house. But, the second criteria was the one Nationwide refused me on, as if I sold my house, after clearing mortgage, my equity left would come in slightly less than 150k. Quite why this even matters I do not understand, as if Nationwide wanted to repo my house & sell it, the money they would make would clear the mortgage 3 times over!!!!

Another option, which Nationwide offered me instead was to simply keep my mortgage as a repayment one, but extend the term - in my case until my 71st birthday! That dropped the monthly payments to actually LESS than interest only would be, and gave me the option to reduce the term back to 20 years at any time in the future free of charge.

getmore4less

Jackinbox99 wrote: »

Another option, which Nationwide offered me instead was to simply keep my mortgage as a repayment one, but extend the term - in my case until my 71st birthday! That dropped the monthly payments to actually LESS than interest only would be, and gave me the option to reduce the term back to 20 years at any time in the future free of charge.

That is not possible.

Check the numbers carefully you may be underpaying.

getmore4less

Deeks wrote: »

She advised that the interest only option is a last resort but has offered a term extension (which is temporary and will be a big help in the short term)

Big sigh of relief

thats good if it helps.

Now time to look at those outgoings and tackle the CC and loans.
have a look on the debtfreewanabee board for ideas.