Moving to Interest Only advice please

blossom36

Hi, I have a repayment mortgage with 19 years left and owe £91k. There is around £40k equity in the house.
I have never missed a mortgage payment however I have many other debts and have a DMP with the CCCS (I should never have taken a mortgage out in the first place as very quickly got into debt - but thats another story..)
I have been considering asking my mortgage lender if I can temporarily move to an Interest Only option as I would like to pay more off my DMP.
Are they obliged to accept my request?
What happens with the shortfall - am I able to make larger payments in the future, as I dont have an endowment or similar policy?
All advice very gratefully received - thank you!

ACG

Theyre not obliged and depending on your lender theyre probably quite unlikely to...a lot of lenders are tightening up criteria on interest only mortgages a lot will only consider it if you owe less than 50% of the value of the property.

What you may be able to do is to extend the term of the mortgage - this would reduce your monthly payments, how much would depend on how old you are and how long is left on the mortgage but it would probably still work out financially better than going to Interest only.

handytips

You are what we call in the industry, A Mortgage Prisoner, your existing lender is very unlikely to approve the interest only option, just so that you can pay more off your DMP. Sorry for being blunt but the truth often hurts. It seems like you shouldnt have taken a mortgage in the first place as you then got yourself into debt, for whatever reason, you then could not pay your debts, for whatever reason, it is nobody else's fault that you have this debt, no matter what anbody else tells you, including Claims management companies. As i see it here is your only option. Sell up, pay off your debtors as they wont be getting much from a DMP which probably hasnt even got an end date. Rent a property until you have got yourself straight (approx 6 years as you will have defaults) and then get a good broker to assess your needs and preferences. Sorry but your road to recovery is a long one and i wish you luck.

blossom36

handytips wrote: »

You are what we call in the industry, A Mortgage Prisoner, your existing lender is very unlikely to approve the interest only option, just so that you can pay more off your DMP. Sorry for being blunt but the truth often hurts. It seems like you shouldnt have taken a mortgage in the first place as you then got yourself into debt, for whatever reason, you then could not pay your debts, for whatever reason, it is nobody else's fault that you have this debt, no matter what anbody else tells you, including Claims management companies. As i see it here is your only option. Sell up, pay off your debtors as they wont be getting much from a DMP which probably hasnt even got an end date. Rent a property until you have got yourself straight (approx 6 years as you will have defaults) and then get a good broker to assess your needs and preferences. Sorry but your road to recovery is a long one and i wish you luck.

Thank you for the advice.
I dont want to sell up if at all possible as my age means I am unlikely to get a mortgage again. Also In 4 or 5 years time I also have potential to make an income on rooms in my house.
I am not suggesting at all that getting into this debt was anyones problem but my own...
What if I ask to go Interest Only in order to have money to make home improvements?? Are they likely to agree?

kaya64

I would ask your mortgage company to switch you to interest only if it is only for a few years, you won't know unless you ask , we switched to interest only last year to ease the pressure while our business picked up , we are staying on it for a while so we can clear our payplan dmp and at least be debt free , then go back onto repayment, we are with Kensington and they have been brilliant never charged us for paying late as we accidently overpaid last year by £2 and this has kept us in credit. Kensington said yes straight away to us wanting to switch to interest only , so I would give it a try .