Mortgage help needed, desperately

narnia2000

Hi, I will try and keep this straightforward: February 2011 I come out of a fixed rate mortgage deal with Bristol and West. I took the mortgage on myself, as at the time, I had a partner with bad credit rating, however I self certified as I had the required deposit and savings. My ex partner left me after 2 years. Since then I have been using my savings to cover my mortgage, however they are almost gone.
My income is £8,400 pa net. My repayment mortgage payments are currently £808 per month, I believe at 4.65%. my council tax is, even with a single person reduction £1500 pa. I have been applying for jobs which fit in with my current employment, to no avail. I have rented a spare room for £320 per calendar month, however I am still short. I have 2 more rooms that I am trying to let.
My question is what to do next? I have been looking at interest only mortgages, which I could afford, however I don't want to change lender so as not to incur fees, also the likelihood is that I would be turned down as I am not sure that lenders self certificate any more??
If I go down the interest only route, how long would I be able to do this for? I realise that the lender would require some assurance of my current mortgage being paid off, would a term life insurance suffice? I ask because I currently owe approx £98000 if I died tomorrow, the house would be sold and more than pay back that sum, therefore what is the difference if I die in 10 years time??
The term of my current mortgage is just over 13 years, which takes me to age 65.
Any help as to what I can do to stop the stress that I have been under for the last 3 years would be appreciated tx.

opinions4u

I think you should sell up and rent.

Sorry if it's not what you want to hear.

beecher2

I agree - can't see any other option than selling up.

shortchanged_2

I'm sorry but looking at your figures I really don't see how you will be able to afford that size of mortgage with your current income.

I agree with the previous posters. You are probably better off selling.

Thrugelmir

There's little you can do to retain the property. Your only option is as others have said.

An interest only mortgage is unlikely to be offered in your current circumstances. As you would still need to provide evidence of how the capital will repaid.

Every month on an interest only basis leaves you one less month to find the capital. This in time will become a burden in itself. Particularly if interest rates rise in the future.

Annisele

narnia2000 wrote: »

If I go down the interest only route, how long would I be able to do this for? I realise that the lender would require some assurance of my current mortgage being paid off, would a term life insurance suffice? I ask because I currently owe approx £98000 if I died tomorrow, the house would be sold and more than pay back that sum, therefore what is the difference if I die in 10 years time??
The term of my current mortgage is just over 13 years, which takes me to age 65.

No, term life assurance won't do as a repayment vehicle.

Usually you choose the term of a life insurance policy to match the remaining term of the mortgage - 13/14 years in your case. If you don't die during the next 13/14 years, the mortgage won't be paid off - meaning there is no repayment vehicle.

There is such a thing as whole of life cover, which doesn't have a fixed term - but it's expensive compared to term assurance, and not something that should be recommended as a repayment vehicle for a mortgage.

I'm afraid I agree with other posters; the only option I can see is for you to sell.

getmore4less

Renting 3 rooms will just about cover the mortgage?
(don't forget the tax)
Why did you not rent rooms sooner?

What about benifits there should be some of those.


You have to see what your cuurent lender will offer

Whats the current rate I make it around 4% whats the follow on rate.


As others have said selling up may be the best option long term
How much is the place worth?

dimbo61

Ring your lender B+W and check what happens to the mortgage after the fix ends and work out if you can afford to stay on a repayment mortgage! if you cant then speak to your local branch mortgage adviser and ask can you go Interst Only for a year or two.
If you can get the other 2 rooms rented out then overpay the IO mortgage and if you get another job then overpay the IO mortgage.
This shows you are making an effort to reduce the debt.
The housing market is very poor at the moment with decreasing house prices, mortgage problems with FTB,s and others higher up the ladder getting a good mortgage deal so if you can hang on in there.
Now check what the mortgage reverts to carefully ! does it go onto the SVR or some form of tracker deal which will both be cheaper than your current fix ?
Just give your lenders mortgage centre a call and ask "what does the mortgage revert to and how much will the new payments be" dont give any more information than that.
Ask what deals they have for you as an existing customer ? They may have a 2 year fix which means you can afford the mortgage paymenst for the next 2 years from savings/benefits and the lodgers
You also need to speak to the nice benefits people re help paying the interest part of your mortgage.
Speak to the CAB and good luck

poppy10_2

narnia2000 wrote: »

I self certified as I had the required deposit and savings.

When you self-cert, you are certifying your own income, not your deposit and savings. Did you tell them the truth that your annual income was only £8,400? As you have £98,000 owing, that would work out at a loan of over ten times your annual income, when normal income multiples are 2-3x annual income.

narnia2000

They didn't ask how much I earned, the property was £162,500 almost 5 years ago, I put down approx £45,000 as a deposit, I, at the time had £40,000 in savings. During the first year my then partner was out of work, therefore my saving reduced to £20,000, half way through the second year he left......the mortgage is in my name only. I have reduced the mortgage to approx. £98,000 over the last 5 years. I didn't rent rooms sooner as there were various jobs which needed to be completed, a catch 22 situation, however I bit the bullet and the jobs were finished in July.
I have not received or been entitled to any benefits, apart from single person council tax reduction.
Currently the market is dead, I feel that it would be a good idea to contact my lenders to ask for interest only for a couple of years, then go hell for leather to bring more money in and overpay.......thank-you for that one.
The house is currently worth around £200,000

Thank-you for all the advice

poppy10_2

narnia2000 wrote: »

They didn't ask how much I earned

They did ask, and you told them; not only told them but certified your own income. What figure did you tell them?
I'm not asking just to be mean, it's an important issue - if you lied about your salary then losing your home could be the least of your worries, you could be facing prosecution for fraud.

Under the circumstances it seems difficult to see how you can hang on to your home - even if you scrimped and saved and lived as frugally as possible, you still won't be able to meet the repayments. Switching to interest only is unlikely to help as you have no prospect of ever paying off the capital. Your best option would be to sell up and rent - thankfully you have significant equity in the property, and will be able to release that money and live comfortably without this constant struggle hanging over you.

Some might say the writing was on the wall when you took out the mortgage in the first place - this from 2007:

narnia2000 wrote: »

My mortgage costs £808 per month on an 18 year repayment, my salary is £520 per month