Interest Free mortgage

babss

Hi all
We have a repayment mortgage with santander and present deal is about to run out, we have a bit of a dilema as hubbys work has just started to run out, we are thinking of changing to interest only for a while but unsure how this is going to work out. Does anybody know how long can you stay on interest onlY? We have Mppi with critical sickness benefit. There is a possibility that I might be made redundant with a possible payout of 20k, we have no savings.
would appreciate any advice
Thanks Babss

marathonic

What's your current mortgage and property value? It may be worth just remortgaging to the cheapest 5-year fixed deal you can get now before being made redundant (if that's possible).

At least then, you'll find it easier to make a budget out and will know exactly how long your 20k payout will last before you need to find alternative employment.

bigadaj

It's now very difficult to get an interest only mortgage without a lareg amount of equity and/ or an alternative repayment method in place, such as isas.

You also need to check the terms of your insurance policy as these will typically just cover the mortgage payments for a defined period,typically a year or two until you find a new job.

babss

we remortgage a couple of years ago nearly up to our limit our property was valued at 160k a year later it was valued at 145k, our mortgage is about 120k I think.
If I was sure of getting the redundancy I would go interest only and then pay a lump some off when we next remortgage, but I cant be sure at this moment in time.
Thanks for your help
Babss:)

opinions4u

Cut costs now before your job goes. Cheaper food. Walk instead of drive. Switch lights and taps off etc. Stockpile cash to help you meet your financial commitments while you're between jobs.

Back out of TV subscriptions and rely on Freeview and your existing DVD collection. Stop using mobile phones if you're out of contract or switch to PAYG for incoming calls only.

A mortgage lender is not obliged to put you on interest only. They are obliged to be "sympathetic" to your situation though. This means that they should assess your income and priority bills and, if appropriate, agree a lower monthly payment.

This wouldn't last forever and is likely to damage your credit file. But it will buy you time to find work or get the house on the market and find cheaper rented accommodation.

I'd suggest you take a look at the Old Fashioned Money Saving board and perhaps visit https://www.makesenseofcards.co.uk to complete a Statement of Affairs (SOA). Post it on the Debt-free Wannabe part of this forum and ask for suggestions on where to cut back.

If you have unsecured credit this should be paid AFTER your mortgage and council tax. Going interest only / reduced payment on the mortgage and paying full payments on unsecured credit is simply wrong.