Repayment Dilemma

cloudy-day

Hi, I’m looking for some advice please.

I’ve been on a DMP since Aug 2009, debt was £80K now down to about £60K. Everything is going well – all interest has stopped and I only get 6 monthly calls which I’m well used to dealing with. Initially I set my repayments too high and underestimated bills, emergency fund etc, but reduced my payments to a more realistic level about a year ago. All payments due to finish in 16 years when I’m 60.

Our mortgage is huge - £185K finishing in 26 years when I am 70 and DH is 76! We were paying half interest only and half repayment, but I realised that was untenable and we are now paying repayment only. There is no equity in the house – we borrowed at 100% staff rates at the height on the boom and then I was unexpectedly made redundant.

Have been in my current job for 4 years – it pays about 25% less than the last one but I can see that that was over-valued. I work in the Investment Sector (Support not high flier) so consider myself lucky to have a job at the moment – last year a quarter of the permanent staff were let go and there is further talk of ‘off shoring’ (making the UK staff redundant and replacing them with a cheaper remote workforce abroad).


Well, my Mum died last year and I have about £90K coming. Goes without saying I would rather have her back than all the money in the World. My dilemma is this:

• Should I pay all the money to the mortgage, reduce the term (it will be to about 12 years) and not mention anything re the DMP, as my monthly outgoings will still be the same?
• Try and negotiate F&F payments, hopefully for less than the full amount owed and use the rest to reduce the mortgage?

1 seems the best option, but although everything is quiet it would be great to move on and only have the mortgage as our debt – and what a debt it is! Sometimes I lean toward 2 but think – what if the mortgage rate goes up? What if the creditors won’t accept F&F payments? What if I get made redundant again?

Please help, any advice is greatly appreciated. BTW I would just say that I take full responsibility for all my debts, but if a reduced F&F is on offer than I think I would be a fool not to take advantage of it.

Many thanks

hadahardyear

hi there
first off, so sorry to hear of your mum.

I have no experience in mortgages, but can only say, if hopefully the companies were to accept f&f and clear your debts, then if the mortgage were to increase, you would have your DMp payments left, as you wouldnt be paying them anymore.

Thats my understanding? x

MusicalLawyer

You have £90k coming in, and debts of only £60k.

I would try and negotiate with my creditors for settlements. Do it yourself and only in writing if you are going to do this though.

You can see that you'd have at least £30k left, if you paid your debts off in full, to pay on the mortgage. You could have more than that if you settle.

If it's a possibility and the charges aren't too much, you could always over pay on your mortgage each month, using what you would have paid in to your DMP, as well as your usual mortgage payments?

Bettingmad

If it was me I would definately be trying F&F's, start low and you could always increase the offers until agreement is reached. Once the debt is paid you can make overpayments to the mortgage if you want. I would also be wanting to keep an ammount for an emergency fund, in case of those lifes little emergencies cropping up.

cloudy-day

Thanks very much for the quick replies.

KellyKing1987 wrote: »

You have £90k coming in, and debts of only £60k.

Sorry but isn't the mortgage a debt also? One that is gathering interest and won't finish until I'm 76?

Will all creditors accept F&F? My worry is that they won't accept it and will demand full repayment, in which case I would have been better just paying interest free over the next 16 years and hitting the mortgage instead.

Sorry folks, this is doing my head in.

Bettingmad

cloudy-day wrote: »

Thanks very much for the quick replies.



Sorry but isn't the mortgage a debt also? One that is gathering interest and won't finish until I'm 76?

Will all creditors accept F&F? My worry is that they won't accept it and will demand full repayment, in which case I would have been better just paying interest free over the next 16 years and hitting the mortgage instead.

Sorry folks, this is doing my head in.

They are not bound to accept however it does not follow that they will expect full payment. How would they, the money that you would be offering is a gift from a familly member on the understanding the debt is paid in full.

sugarplum10

If you dont ask you dont get so i would try to get settlment discounts. Its good to do this via email so you have a papertrail and they pay by balance transfer so there is clear evidence of payment!
If you get settlements (you can get anythig from 90% to as low as 40%) this will be the best option.
If the companies say no then just do the ones that say yes and use the rest for an emergency funds and your mortgage.

MusicalLawyer

I was going by what you stated on your original post where you stated

cloudy-day wrote: »

...debt was £80K now down to about £60K...Our mortgage is huge - £185K...

Martin (MSE) says that the best way to clear debt is to pay it off by starting with the one with the highest interest. So you could write all your debts down in interest order, and start with the highest interest ones, offering F&F where you can.

If you're going down the F&F route make sure you say in your letters that a family member is offering to give you £x amount as a gift to pay off this particular debt. And send everything via recorded delivery, so they cannot then say they never got your letters!

Aiming_High

I'd try and get F&F figures.

Say you get 60% F&F's that would be £24,000 saved. They may not be accruing interest - but you will pay the full amount if you carry on with the DMP and pay off the mortgage. You can then over pay the mortgage with the original DMP payments saving interest too...

cloudy-day

KellyKing1987 wrote: »

I was going by what you stated on your original post where you stated



Martin (MSE) says that the best way to clear debt is to pay it off by starting with the one with the highest interest. So you could write all your debts down in interest order, and start with the highest interest ones, offering F&F where you can.

If you're going down the F&F route make sure you say in your letters that a family member is offering to give you £x amount as a gift to pay off this particular debt. And send everything via recorded delivery, so they cannot then say they never got your letters!

Thanks. The mortgage is the only debt that has interest on it - all the ones on my DMP stopped charging a couple of years ago.

Think I will start by offering low (30%?) and see what happens.

So I am better off saying someone (sister?) is offering to lend me the money for F&F? It does sound a better idea than stating I have the full amount! Hadn't thought of that.

Many thanks for you help everyone.

DS4215

cloudy-day wrote: »

Think I will start by offering low (30%?) and see what happens.

So I am better off saying someone (sister?) is offering to lend me the money for F&F? It does sound a better idea than stating I have the full amount! Hadn't thought of that.

Start even lower (20-25%) - you can go up from your initial offer, but you can never go back down...

Just mention it as coming from a third party family member (don't get too specific).