Switching to interest only mortgage

wildz

OH applied for bankruptcy in March as small business failed. He ceased trading in October last year and sold his van for us to live off. In January he got a job and in May was made redundant. He has done various odd jobs (fencing painting etc) to helpfund food bills etc. When he asked Santander if we could change to int only a few months ago they declined saying we had to pay our car loan off first, the last payment is due end of this month. Our mortgate is £595 a month, i earn £1,172 a month and cannot afford to pay for everything out of that, my OH does not qualify for JSA either. Once the last payment comes out for this loan we are again going to ask, do you think we will be accommodated? even if it is only for 6 months. I am hoping that OH bankruptcy will not go against us as the reason why we have high payments is because money was borrowed on the original mortgage for OH small business. WE currently have around £25 - £30,000 equity on house depending on what the house would be sold for if it was sold.

holly_hobby

Firstly, I am sorry to hear of your Hubbys problems, he certainly isn't in isolation it that helps...

Ok , couple of things ...

1. Have you/your hubby ensured that you are in receipt of all eligible DWP benefits (largely relevant when there are children), inc tax credits, inc support/help with your mortgage (SMI) etc ?

2. Did the TIB put any kind of charge notification on your house as part of your Hubbys BO ?

3. How do you plan to take account of the unpaid equity, if you go onto I/O ? (demonstating a plan such as this to your lender may assist in their review)

4. What is your Hubbys long term plan for getting back into work ? Demonstating a plan to your lender will show that you have and are actively looking to solve the current financial issues - and that you don't intend for any arrangement to be long term.

5. Your lender under MCOB, should be actively looking to assist - where possible and relevant, which can involve switching a mge onto interest only for a period of time. However, no lender will wish to have any arrangment in place for the longterm - and if they feel the situation may be as such, they will be less likely to conceed. So trying to demonstrate that you also feel the same way, and are actively looking to resolve the finance issues you have, will aid your application and chances of a successful (albeit temporary) change of repayment method, no end.

Hope this helps

Holly x

wildz

Yes i have tried to get all benefits, we are both in our fifties. I earn over £17000 and as WTC covers a previous tax year it was a nil allowance.
Although OH does not get JSA he still sees his advisor who has given him various jobs to apply for. He only yesterday gave his CV towards a job that his advisor recommended, so we are waiting to hear from that. He has done on-line applications for ASDA and B&Q and did nt get through the assessments either. while he is looking for work he has been doing odd jobs as i said previously.
There has not been a charging order put on the house yet,the trustee has asked for a copy of the valuation that we had done a few months ago, and his interest in OH's beneficial interest has been logged with the Land Registry.
OH has never been out of work and is hard working but he has never known the climate to be so bad.
We have never been behind with the mortgage (what is SMI?) before all of this, and have sold our caravan,the 4 wheel drive for a smaller car. I have been told that as i am earning near the limit for any benefit help such a CT benefit i will not get any.

thanks
P.S. This is a good site.

holly_hobby

Sorry, SMI - is shorthand for Support for Mortgage Interest.

This is the benefit of DWP providing assistance with mge interest payments, for homeowners whom are in receipt of qualifying income related benefits of:-

Income support
Income based JSA (which I know your Hubby doesn't qualify for you say)
Pension credit
Employment and support allowance

If you have exhaused all enqs re what you are eligible for, then at least you know you are not missing DWP income which you are entitled to.

Re-applying to your lender for a temp change to IO will be at their discertion, but if you put together a valid case as to why you believe it will be shortterm (if you do of course !), and how you will manage any capital shortfall/arrears - this will assist your case.

However be prepared that they may refuse the request, and you may well have to contemplate selling your home if your finanical situation does not improve and the situation with the lender becomes untenable.

Hope this helps ... I wish your Hubby well in his job search (and do appreciate how difficult it is in the current climate x )

Holly