Not being to able to afford mortgage balance

missi1

Hi
I'm just after some advice on my situation and would really appreciate any.

Currently I'm single and live with my teenage son in a mortgaged flat which was purchased off the council 5 years ago on the right to buy scheme.

I have adverse credit for defaults and unsecured debt for approx £12,500 which is curently paid through Payplan at a reduced amount of £50 month as I am recently unemployed but desperately looking for work.

The mortgage is with Preferred through Acenden for £74,500 on interest only and the flat is probably worth approx £82,000.
Acenden have never been able to transfer me to a repayment mortgage as they don't allow it.

The problem I have is I can't move to another lender for a lower rate due to credit history and debts and to be honest I don't think I would be able to afford a repayment mortgage anyway.

In approx 6 months my child tax credit, child benefit and child maintenance will stop as my son will finishing education which will leave me in a worse position, even if I am working but my main concern is that I will never be able to pay off my mortgage as I have no money set aside to pay the balance when it ends in 25 years. I probably won't be able to afford a repayment mortgage as if my earnings are say £1050 per month, which is what I was previously earning, £658 of that goes on food and bills and can't really rely on board from son as he might not get a well paid job until at least a couple of years time when finished apprentice and then who knows, he may move out.

Here are my monthly outgoings

Mortgage £40 (£20 arrears and £20 to cover difference from housing benefit
Home Contents Insurance £10
Leasehold fees/service charge £40 (spread over 6 months) This varies each year
Ground rent £10 per year
Electric £110 (includes £50 arrears, total £645)
Gas £25 month (pre payment, variable)
Pet insurance £10
Tv Licence £13
Phone/Broadband £25
Mobile £10
Groceries £220
Fuel £40
Car Breakdown £10
Car Tax £10
Car Insurance £ 55
Payplan £50
Water rates £28
Total £658

Monthly income

Job Seekers £270 (includes small deduction for crisis loan soon to be cleared
Child Benefit £82
Child Tax credit £176
Child Maintenance £136

Total £664

If I was working and not receiving any of the child benefits (which will happen in 6 months) I would then be paying council tax of £65 per month and mortgage of currently £235 which would then make it a total of £938 per month and earning say £1050 per month, it would still prove difficult to switch to a decent rate repayment mortgage.

Can anybody offer any advice as it's like I am renting at the moment. Was considering a mortgage rent back scheme but not too sure. To qualify for a debt relief order I would need to be renting also.

I realise that once my debts are paid off I will have more spare cash but that could be a few years yet.

Thanks in advance

loopy136

Just a quick note, this might be better in the debt thread as probably more people who could advice you. Will your son be going into employment, with the possiblity of helping you slightly?

Groceries may be able to be cut down if there is only 2 of you.There are always things that some people do not budget for such as gifts, haircuts and repairs to vehicles, so would encourage you to try to save anywhere.

Sorry i am not an expert in this but someone with be over shortly to assist you i am sure. Lots of advice on here, keep reading.

Good luck x

betmunch

Agree, best off in the debt thread for now.

If you cant afford a repayment mortgage, arnt allowed to change this mortgage to repayment anyway, and cant change provider, then you need to make savings somewhere.

Once you are able to make the savings and have paid your debts off you will have some spare cash then you need to take investment advice so that you have the £74,500 mortgage balance ready to pay at the end of the term.

Its good that your addressing it now though. Good luck

missi1

Hi and thanks for your advice. I have moved the thread to the Debt forum.

Loopy, my son should be starting an apprentice in a few months so will be a low wage and can't really say at the moment how things will go after completing that

Perelandra

Two small things-

For your gas and electric, do you know which tariffs you're on from your current supplier?

And for the water rates, if there's only two of you it may work out cheaper to get this metered, (assuming it's not already!).

DVardysShadow

New thread started on DebtFreeWannabe. Go here https://forums.moneysavingexpert.com/discussion/3986987 to respond