Made Redundant - Options

Andy_1234

Hi,

I have recently been told I am being made redundant. My last day of work will be the end of January.

I am trying to think clearly and work out ways of reducing our monthly outgoings.

Our mortgage is
£940 per month
5yr fixed rate (started in May 2009)
90% LTV
6.1% (I think)
With C&G

I have rung C&G to see what could be done, this is what they said:

1. We can switch to interest only but I was asked if we have a 'repayment vehicle', which we dont, so we cant switch under 'normal' circumstances

2. They can allow us to switch to interest only without a repayment vehicle if we are going to struggle.

3. They could allow us a 3 or 6 month payment break, but the interest will then be added to the balance making the future payments slightly higher.

The above will be subject to us meeting their criteria.

I have also considered re-mortgaging, but we will be hit with a £6k early redemption charge. A house near us has sold for more than our recently, but none of the houses near us are the same so it's hard to value our. We have done extensive work on the house since moving in, but I appreciate this means nothing unless someone wants to buy it.

I know I have 3 months to find another job, but I want to ensure I am prepared for the worst.

Can anyone help shed some light on the re-mortgaging option?

Many Thanks
Andy

Thrugelmir

In your current circumstances remortgaging is not an option unfortunately.

Andy_1234

Do you meant because of the LTV or being made redundant?

Thrugelmir

You would require a stable income to apply for a mortgage with another lender.

As you are aware of impending redundancy. This is a material fact that you would need to disclose.

How would you fund the ERC of £6k? Little point in reducing outgoings but increasing overall debt.

Andy_1234

Thrugelmir wrote: »

You would require a stable income to apply for a mortgage with another lender.

As you are aware of impending redundancy. This is a material fact that you would need to disclose.

How would you fund the ERC of £6k? Little point in reducing outgoings but increasing overall debt.

That's something I overlooked, I would have to declare my redundancy.

I didn't know if it's possible to borrow extra to pay the early repayment charge. I thought it unlikely, but I just want to explore all options.

I don't know if I have an early redemption charge if I switch to a different product, but still with C&G.

Looks like the option of a 3 or 6 months payment break might be the way to go, although I hope it wont come to that. I would need to see how much it would increase the monthly payment after the 3 or 6 months.

Mrs_Z

Is there no way they could allow you to switch to interest only for a fixed time, say 6-12 months?

Andy_1234

Mrs_Z wrote: »

Is there no way they could allow you to switch to interest only for a fixed time, say 6-12 months?

They will allow this if we are going to struggle to make the payments, but the payments will only go down from £940 to £830. It still worth considering though.

DannyboyMidlands

SMI may pay the interest up to about 3.5%. Could you possibly cover the reamainder from savings/redundancy payment in the short term?

Dick_here

How much are you going to get in redundancy money ?

Andy_1234

!!!!!!_here wrote: »

How much are you going to get in redundancy money ?

I haven't got the final offer, but it's just going to be 4 weeks statutory pay plus any holidays I have left. I think the statutory is £330 per week, so maybe around £1500. Not much, but it might keep me going for a month.

opinions4u

Ok, fingers crossed you can find a job and get through this. So get the CV up to date and start looking.

But manage your finances NOW as if you were out of work. Cut back on everything and build up some savings balances. This will mean you can buy a little more time after the job ends.

- cancel Christmas spending. Put the tree up, basic exchange of cheapo gifts and enjoy each other's company.
- turn the heating down and put a jumper on.
- make sure taps aren't dripping. Shower instead of bath.
- turn lights off and make sure the telly and other items aren't left on standby.
- start walking to work / car sharing / whatever can get travel costs down.
- make your own sandwiches instead of buying lunch at work.
- no coffee culture, cafe lunches or meals out.
- stop buying luxuries at the supermarket such as crisps, biscuits, "Finest" and look to build meals around rice and pasta etc (cheaper own brands).
- give up brand loyalties and get whichever brand is cheapest that week.
- consider shopping close to closing time for the late discount late on date offers. Can often do tea cheap the next day.
- change to cheaper sim only phone contracts (or no phone contracts at all).
- cancel the Sky and start watching the DVD collection!
- review energy contracts and consider switching. Same for buildings and contents insurances. Register with www.topcashback.co.uk and earn cashbacks if you do switch.
- stock up on stuff you would normally get that's on bogof etc (but don't buy stuff you won't use).
- cancel the newspapers.
- make sure you don't build up any new debts on cards etc.
- register with sites like www.valuedopinions.co.uk and do surveys. Boring as hell but it's £3 an hour that can earn a shopping voucher.

Start the austerity measures immediately. It will give you the best chance to stretch things out if needed. Be genuinely radical.

Oh, and check out benefits on Direct Gov. The tax credits system may not replace a decent wage, but it can help you keep your heads above water.

Take a look at the Debt-free Wannabe forum and the Old Fashioned Money Saving bit too. Some good ideas there on how to cut back.

I wish you all the best.