Mortgage Question: Interest-Only & MIR

tezzaa61

Hi Folks,

Looking for some advice.

I've been unemployed for 15 months and claiming JSA.
I have had an arrangement in place with Nationwide for about 8 months or so
to just pay the interest on my mortgage.
Normally every 3 months they extend the arrangement for another 3 months after getting me to go through my income/expenditure.Last time they only extended it for 2 months as I was unfortunate to speak to a stroppy adviser on the mortgage team. She said it can't be extended indefinitely and I would need to call again in August to review my situation.

I've a couple of weeks temp work coming up and the two questions I have are:

Could I not just switch my mortgage to Interest-Only.
I'm currently on a standard variable rate of 2.54 %.
I briefly spoke to someone on the desk at my Nationwide local branch,
and he said to do that I would need to take out an endowment policy as
I do not have enough equity in the house.
My significant other, who has her own house, went Interest-Only about a year
and a half ago, and she was not required to take out an Endowment Policy at
her Mortgage Provider. Is that requirement set-in stone somewhere, or does it vary from bank to bank Is it worth me talking to a mortgage adviser at the Nationwide. I'm not in a position to afford a policy.

My second question is with regard to Mortgage Interest Relief (MIR) that the DWP pay. If I work for 2-3 weeks, when the temp work is over, I was told I could do a Rapid Re-claim for JSA and that my claim for MIR would also be linked to the re-claim and I would continue to get it. Is that the case?

Any advice would be most appreciated.

Cheers

Terry

holly_hobby

Your mortgage lender has already demonstrated that they have assisted in your situation by permitting you to temporarily go on to an interest only repayment basis - which is being taken care of by the DWP benefits you are in receipt of.

So they will be able to demonstrate to the court (if it comes to a possession order) that they have shown flexability in your finanical circs, however if your unemployment is likely to be longterm, they do have the right to refuse a perm change of repayment method, and/or demand the necessity of a repayment vehicle. (other than by virtue of selling the property). (and to answer your q, yes all lenders will approach interest only differntly, some don't allow, some if the LTV is 75% or under, with or without proof of a repayment vehicle - so you can not compare yourself to your GF, unless she is also unemployed too and also having her mge interest paid by social benefits from DWP)

If they change you back to C&I, then whilst DWP will continue to pay the interest , you will obv need to meet the capital element - or go into arrears, with circa 3 mths being the time that they will start to consider the pursuance of a possession order.

I'm sure you dont' intend to be long term unemployed, just as I am sure that you can understand the lender can not allow their exposure in this matter long term ... something has to give eventually !

Hopefully after over a year unemployed, you will soon find yourself a permanent job, which will enable you to lift yourself out of the DWP dependency you have unfortunately found yourself in.

Hope this helps

Holly

tezzaa61

Hi Holly,

Thank you very much for your reply, it is very helpful and helps me to see it from the mortgage lenders perspective, as well as my own.

Hopefully, I will find some permanent work soon, things are going in the right direction.

Much appreciated,

Terry