Single Mum trying to reduce mortgage

ems73

To put things into context, I separated from my husband last May and and he moved out of the house and into rented accommodation. Straight away I contacted the mortgage company (Mortgage Express) to ask to for my repayment mortgage to be made interest only. He was not working at the time anyway, but I was hoping my new circumstances would make a rather exessively high monthly mortgage payment smaller and more managable. This would have changed the payments from £980 to about £500 a month (the mortgage loan amount is about £161,000). I sent them some info, filled out their forms but for they seemed reluctant to change the mortgage, despite me now being separated (ex-husband is unfortunately named on the mortgage, even though he pays nothing towards that, or indeed anything in terms of child maintenance either). The guy I was dealing with was quibbling over my child/working tax credit payment. At first he said my small wage was too much when the tax credits of about £400 were added onto it, then when I reduced my income by about £400 (I'm self employed and although on a low income, I've been trading for less than a year so had to make up some sums which I thought would be workable i.e around £2000 a month total income after tax...) He then said that the income was too low and that because of that there was no point in reducing the payment as I wouldn't be able to afford it anyway. I was really cross and upset and ended up crying on the phone!
That was last June (2011). I then gave up on that and managed (with great difficulty) to pay the £923 a month until now. Since Christmas I've not had any work (I'm a female tradesperson) - I think this is a temporary stoppage but I have decided to claim JSA just until work comes in again. I thought that might force the mortgage company to let me go onto interest only, or perhaps take a break completely for a few months from making payments.

I am slightly worried that I'm in a catch 22 situation as I'm currently getting my (soon to be) ex husband off the mortgage by way of a Consent Order, but this won't happen for at least 8 weeks. He does work but isn't registered for tax yet so I don't even know what I should say about him if they ask??

The longer term should be ok - I've just started a new relationship and I guess in time we would end up living together, plus work should start coming in again in the Spring. I am annoyed that the mortgage company didn't convert my mortgage to Interest only back in June last year as I would have been able to save for times like this when work is dry.

Any advice would be greatly received. I'm not sure of the best way to word a letter to the mortgage co.

BoGoF

To be frank going interest only so that you can save money for when work is dry is not really a sufficient reason for the lender - if you can barely afford the payment when you are working then how do you expect to pay it when you aren't.

I'm not 100% sure on consent orders but normally if a lender thinks there's any risk of a default they will not let the other borrower come off the mortgage - that way they have 2 people to get payment from.

The bottom line is can you afford a £161,000 mortgage on your sole income.

Annisele

I think the lender might have been concerned when you started to "make up some sums which I thought would be workable".

I know that tax credits can be horrendously confusing, even if you're not self-employed and recently separated - but is there any chance your lender thought "this woman is telling me whatever she thinks we want to hear so we reduce her payment"? If they did think that, then IMO it's not surprising they said no!

I also think you might not be approaching this from the best angle. You sound as though you think there might be some way to force the lender to do what you want - there isn't. You and your ex agreed to pay the lender a certain amount every month, and that's what you are both contractually obliged to do whether you're working or not.

If you're not working, I'd be surprised if your lender agrees for your ex to come off the mortgage; the lender would rather have two people to chase than one.

I know this isn't helpful, and I'm sorry. But, as BoGoF says, the bottom line is: can you afford the mortgage on your sole income? If not, you might need to give serious consideration to selling up.

Skint_yet_Again

Just wanted to let you know I understand what a difficult time seperation/divorce is. In my case when I got divorced I did not want to go onto interest only but did manage to get the lender to change/extend the term of my mortgage. We only had 10 years left and I extended to 25 years. (This was a short term measure and I am now managing to overpay to reduce the balance)Maybe this is something you could consider asking your lender. Some lenders do charge a fee to reduce the term or change to interest only.

The consent order itself will not remove your ex from the mortgage. You will have to apply to the lender for a transfer of equity.The lender is under no obligation to agree to this. You have to pay them for this (I think it was round £150 about 8 yrs ago, plus payment to Land Registry & solicitor fees thankfully I didnt have to get a valuation also) However I had to prove I was capable of covering the mortgage payments on my own. Luckily my lender took my maintenance under court order & tax credits into account, but some lenders dont. However I think you will find it difficult if you cant prove your income or dont have much income. Good luck.

jalapenojojo

The Lender needs to know that you have a sufficient payment vehicle in place to cover the amount of the loan - i.e. paying into a separate scheme to get a lump sum at the end. This is something the Financial Services Authority ask all lenders to find out from their interest only borrowers.

The worry is, that having an interest only mortgage as a means to reduce mortgage payments will not enable the borrower to pay off the loan at the end.

ACG

Your in quite an unfortunate position.

It sounds like you are struggling with the repayments and because you are self employed and not earning a huge amount you wont be able to get another mortgage.
So its not like you could downsize. I think you need to be realisitic, if your business its not paying its way then you might need to consider a full time job....run that as a side line to boost your income but until you have a more stable income then why would a lender take a risk on you.

I was/am just coming out of a similar situation. I started my own business in August last year, i struggled until december and only now (dec/Jan) am i making enough to pay my bills. There is very little spare money, in December i even started applying for part time jobs just to help. It might be time for a reality check