Help!! Trying to sort myself out!

1968cassie

I have got myself into a right mess! I currently have an interest only mortgage with Northern Rock and still have around 34K outstanding. I fell behind with my endowment payments a while ago and would like to surrender this policy and change to a repayment mortgage. I also have outstanding debts of around £10k which my parents are going to clear for me. But on top of that, my soon to be ex hubby and I also have more outstanding debt of around 30K which is in the hands of creditors and he is paying off. This consists of £1700 on a joint current account (which i never used or paid anything into) and a personal loan which he took out in his name but i co-signed. The mortgage is in my name only. I bought my flat before i met him and still have around 15 years to go on mortgage. Is there any chance the bank will let me change my mortgage to repayment? I dont want to borrow anything extra just the amount that is outstanding. Or am i wasting my time even asking them? Any advice would be greatly appreciated. Thanks

Engeroosi

Just remortgage your flat with a repayment mortgage and pay off the mortgage you currently have, Depending on your credit rating on how good a mortgage deal you will get but i'm guessing the flat is worth alot more than your outstanding mortgage amount so you should be in a good position. Anything that your hubby is in debt with effects you since you are both tied still financially.

blueberrypie

1968cassie wrote: »

I have got myself into a right mess! I currently have an interest only mortgage with Northern Rock and still have around 34K outstanding. I fell behind with my endowment payments a while ago and would like to surrender this policy and change to a repayment mortgage. I also have outstanding debts of around £10k which my parents are going to clear for me. But on top of that, my soon to be ex hubby and I also have more outstanding debt of around 30K which is in the hands of creditors and he is paying off. This consists of £1700 on a joint current account (which i never used or paid anything into) and a personal loan which he took out in his name but i co-signed. The mortgage is in my name only. I bought my flat before i met him and still have around 15 years to go on mortgage. Is there any chance the bank will let me change my mortgage to repayment? I dont want to borrow anything extra just the amount that is outstanding. Or am i wasting my time even asking them? Any advice would be greatly appreciated. Thanks

When you say the 30k debt is "in the hands of creditors", do you mean that there were defaults? This will affect your credit rating and your ability to borrow.

It is irrelevant whether the joint account and personal loan debts were actually your husband's - your name is on them, therefore you are responsible for them. If he stops paying them, the creditors will come after you as well as him. Be very cautious about these.

Regarding your mortgage, is there any reason why you can't simply make overpayments? If you can afford to make the higher monthly payment of a repayment mortgage, you can simply pay the extra as a capital repayment instead. This will have exactly the same effect as switching to a repayment mortgage for the same amount, over the same term, at the same rate.

1968cassie

Thanks for your replies. I am aware that debt is in both our names but our split is amicable and he has made arrangements to pay this back. There have been defaults and that's why creditors are now involved. My flat is currently worth around £100k and still have 34£ outstanding. Never thought about making overpayments. Have worked it out and could probably afford to pay an extra £100 per month. Lets hope that bank agrees!!! Thanks again

getmore4less

I think the fisrst thing to do is check out the situation with the endowment and what options you have there, cash in sell on make paid up etc.


As long as there are no penalties for overpaying there should be no problem with that and this may be preferable to going repayment which commits you to the higher amount.

The down side is you will have to keep track of where you are as to paying off the loan in time(15y) but this is relatively easy with a mortgage calculator.
http://www.whatsthecost.com/mortgage.aspx

£34k @ 5% over 15 years needs a payment of about £270pm interest only would be £142 so an extra £130pm

Whats the current interest rate?
Put that in the calculator and see where you are.

Depending on the outcome of the endowment enquiries there may be a smaller amount owing or the chance of a lump sum to help later.

You may also have the option to extend(depending on age) the term if there is still a shortfall closer to the time say around 5 years to go or you could look at that now

Even though you have good LTV and possibly OK income multiples the problem will be the defaults, this will most likely mean you are not going to be able to switch lender but it might be worth a chat with a good broker to see if there is anything they can do.

Edit: forgot to add make sure you have a good busget and an emergency fund before overpaying, no point in overpaying and then finding you are stuck for some money later.