Should I take a payment holiday?

freeasabird

My fixed rate mortgage finished more than a year ago and since then, I've been paying the base mortgage rate that is now 2.5% on a mortgage of £45,000.

I overpaid the mortgage when the interest rates went down but I've been made redundant and unless I get a job soon; the payments will wipe out my savings.

I've reduced the mortgage so I'm not overpaying but even paying the standard amount will become difficult.

I'm currently paying £440.00 a month but have no income and I'm only entitled to contribution based JSA for six months. I haven't signed on yet but I will do soon.

I don't know what to do. Should I ask for a reduction in the payments or a payment holiday? What will incur the least interest penalties?

The reason why I took out the mortgage (a disputed demand from the local authority) could be sorted out in six months time but if it isn't; my mother's house (she's retired) is on the line.

Thank you in advance for any suggestions.

freeasabird

I should have pointed out that it's a ten year mortgage.

dunstonh

Have you found out if authorised arrears is a possible option? Typically, those that allow authorised arrears do not allow it when its due to affordability.

haras_nosirrah

if you have been overpaying they may allow you to underpay to the value of any previous overpayments. Depending on how much you have overpaid this may give you some breathing space. You are better going interest only temporarily than going into authorised arears as the may record this on your credit score.

jamesd

Consider telling the council about your changed circumstances that make it particularly urgent that the matter is resolved quickly, due to hardship.

mambo69

If its nationwide can you just ask to extend the term?

freeasabird

I spoke to Nationwide and the only options that they suggested were:

Changing to an interest-only payment mortgage which would bring the payments down to £60.62 a month. There's no time period.

Their concern is that I could stay on interest only for the remainder of the mortgage period and then what happens if I can't pay it off.

They wanted to know if my mum and I had savings or endowments to cover the £29,000 that is left to pay on the mortgage.

The other alternative is to agree to sell the property so that they can get their money back. That sounds a bit drastic but if I fail the pay the mortgage; they'd do that anyway.

The other option is to extend the term of the mortgage but it cannot go beyond the 75th birthday of the oldest person on the mortgage. (mum's 67).

The morgage term would be extended by 2 years and the payments would go down to £328.58 approximately.

The Nationwide were more keen on the interest-only option but I don't know if that's because if I fail to pay up at the end of the term; they can sell the house.

Why do I have a nagging feeling that the interest only option sounds too good to be true?

I don't plan on being unemployed for too long and some of this may be academic but it's best to plan for all eventualities.

Thanks for the suggestions; all of you gave me the courage to deal with this rather than just hide under the sofa.

dimbo61

I would take the Interest only option and once you do get a job then overpay the mortgage every month!
Then when you do get back in employment
Just ask Nationwide to change your direct debit using "whatsthecost" website to work out how much you need to pay each month to clear the mortgage over the 7/8 years left.

getmore4less

freeasabird wrote: »

I spoke to Nationwide and the only options that they suggested were:

Changing to an interest-only payment mortgage which would bring the payments down to £60.62 a month. There's no time period.

Great that will preserve the savings

Their concern is that I could stay on interest only for the remainder of the mortgage period and then what happens if I can't pay it off.

You have to find the money or sell, but interest only is the minimum you can always overpay and bring the mortgage down to zero ASAP.

They wanted to know if my mum and I had savings or endowments to cover the £29,000 that is left to pay on the mortgage.

Above you say £45k so have you overpaid by £16k allready?

The other alternative is to agree to sell the property so that they can get their money back. That sounds a bit drastic but if I fail the pay the mortgage; they'd do that anyway.

The other option is to extend the term of the mortgage but it cannot go beyond the 75th birthday of the oldest person on the mortgage. (mum's 67).

THats another option to give time and there is always the option to go it alone then to give ou even more time.

The morgage term would be extended by 2 years and the payments would go down to £328.58 approximately.

Still to risky without any income.

The Nationwide were more keen on the interest-only option but I don't know if that's because if I fail to pay up at the end of the term; they can sell the house.

I don'tthink they really care, what they do know is htat the smaller the payment now the longer you have to get sorted before savings run out which is best fort he maas well(reposessing is a lot of expence and work)

Why do I have a nagging feeling that the interest only option sounds too good to be true?

There is the risk you don't pay off the capital and end up with a problem but this is all in your control

I don't plan on being unemployed for too long and some of this may be academic but it's best to plan for all eventualities.

Thanks for the suggestions; all of you gave me the courage to deal with this rather than just hide under the sofa.

Interest only is the holy grail for those that want to manage there own payment schedule.

I would spap their hand off and ask if you can extend the loan the 2 years at the same time but this is less critical.

Then you have a small payment to make and can overpay whenever you feel you can aford it, I would rebuild the savings first.

You can track where you need to be by using a mortgage calculator and set up your own repayment schedule on top of the minimum payment.


The reason why I took out the mortgage (a disputed demand from the local authority) could be sorted out in six months time but if it isn't; my mother's house (she's retired) is on the line.

Does this mean when that when this is sorted they will pay you back?

freeasabird

getmore4less wrote: »

Interest only is the holy grail for those that want to manage there own payment schedule.

I would spap their hand off and ask if you can extend the loan the 2 years at the same time but this is less critical.

Then you have a small payment to make and can overpay whenever you feel you can aford it, I would rebuild the savings first.

You can track where you need to be by using a mortgage calculator and set up your own repayment schedule on top of the minimum payment.


The reason why I took out the mortgage (a disputed demand from the local authority) could be sorted out in six months time but if it isn't; my mother's house (she's retired) i.s on the line.

Does this mean when that when this is sorted they will pay you back?

Hello Getmore4less,

I expected this to be sorted out before the two year fixed rate ended but it's been dragging on so long; it's now into the third year.

As it's still in dispute the money has been put away just in case we lose.

I've only been overpaying for about a year but I doubt if I've overpaid by 16k although it would be nice if I had.

After standard payments and a period of overpayment; 29 k is what is left to pay on the mortgage. If we win the case; we'd be in a much better position but I'm working on the worse case scenario just in case.

Thank you for help.