Northern rock turned down mortgage extension ... What now?

inspector_gadget_3

Hi, my husband was working self employed and became I'll with his back and depression over the last 10 months or so. He claimed ESA in July and after having a medical has been placed in the work related group. He will eventually have to return to work with much less hours as he has trouble sitting/standing for long periods. He's applied for job as crossing patrol even tho it will be £40 less than his benefit and put us in more hardship ... But that's the type he is he wants to work.

We are currently on debt management plan with cccs of £70 per month .. We can't afford the full mortgage and asked two months ago for help from. Northern Rock. They suggested interest only for a year, but after the year the payment would increase from our regular £375 to £580! So it would be irresponsible to go ahead with that even though it would make payments £212 at present.

We then asked if we could extend and were going through that and waiting to hear. That would of took our payments to £284 ... Affordable with our current income. After hearing nothing I phoned up and was told we had been declined on affordability (future affordability I gather).

We have an endowment which is due to pay off the interest only in 4 years £26,000 and the remaining £28,000 is on repayment.

So my question is do we have any other options or are we to lose the house - even though we could afford it if they extended the repayment parts. I am on long term incapacity and low rate dla and have kids 7 and 15. We are 1.8 months in arrears(£600approx) .. Which has occurred because they put us on a less payment while they sorted things out.

Any suggestions would be appreciated. Also if we continued paying the £284 but because of the difference we owed, we're taken to court for arrears .. What would the outcome be regarding NR not allowing the extension. would we just automatically be told pay difference or lose the house?


Very worried and after losing my mum, and my partner losing his dad both within the last few months ... Its been a year from hell and could really do with at least not losing the home we have lived in for past 13 years ( with no missed payment before this year).

Appreciate your help or advice

Jo

inspector_gadget_3

Bump ... In case anyone can help :-)

Thrugelmir

Suggest you book an appointment with your local CAB.

Unless your income is likely to improve significantly in the medium term. Then you will continue to struggle financially. You need to weigh up the best options for the longer term. Whilst losing the house may be a wrench. It may well be the way to lift an enormous amount of stress off you and your husband. I suspect that the children will be feeling this pressure too.

inspector_gadget_3

Thanks for your answer ... Honestly i would class losing the house as the worst scenario possible. It's been such a bad year that to uproot the kids from something familiar and stable and very close to family and their schools would be the very last resort.

I guess what I am surprised at is that we are on a cccs plan where we have to do a budget and its the same budget we sent to NR, so We could afford the reduced payment if the extension had been accepted. I know it's not as simple as that just thought they would help you not lose the house ... I guess not :-/

There are options like not paying cccs but then because we have a reasonable amount of equity could creditors force the house sale?

Cheers for advice :-)

dippy

inspector gadget, it's best that you seek formal help from the CAB to identify any other source of income or benefit.

Because of the period of irresponsible lending by the banks, they now have tighter criteria to assess suitability for loans and mortgages. And unfortunately, a term extension would trigger that re-assessment.

fearlessdukuman

You have arrears on your mortgage.

You should be paying the £70 a month towards the mortgage rather than CCCS.

Unsecured creditors can wait until you can afford to pay.

You won't lose your home for £600 of arrears.

Can you not afford the current monthly repayment at all?

Thrugelmir

dippy wrote: »

Because of the period of irresponsible lending by the banks, they now have tighter criteria to assess suitability for loans and mortgages. And unfortunately, a term extension would trigger that re-assessment.

There are situations such as this. Where the lenders approach has always been different.

inspector_gadget_3

Thanks for your replies .. I will definitely make an appointment with CAB.

They haven't really been chasing us for the arrears ... As we were still going through the process.

If we didn't pay cccs and had a very very meagre food bill then yes we could probably pay the full mortgage payment, but like I mentioned I thought that not paying the unsecured debt would lead to them possibly forcing the sale due to equity in the house .. Is that correct?

Also if we let cccs know what we were paying out if paying the full mortgage payment ... They would not accept us on the DMP due to not having enough to live on .. As they have set criteria for food and it would fall quite a bit short.

One ray of light is that we have been sent a form from benefits to send into NR for help with the interest on mortgage ... So maybe that's worth doing ... Even if it's £50 it will help.

I don't mind scrimping and scraping if it means we keep the house .. I guess I'm just a little gutted as the extension would have made things a little more easier to manage.

fearlessdukuman

inspector_gadget wrote: »

Thanks for your replies .. I will definitely make an appointment with CAB.

They haven't really been chasing us for the arrears ... As we were still going through the process.

If we didn't pay cccs and had a very very meagre food bill then yes we could probably pay the full mortgage payment, but like I mentioned I thought that not paying the unsecured debt would lead to them possibly forcing the sale due to equity in the house .. Is that correct?

Also if we let cccs know what we were paying out if paying the full mortgage payment ... They would not accept us on the DMP due to not having enough to live on .. As they have set criteria for food and it would fall quite a bit short.

One ray of light is that we have been sent a form from benefits to send into NR for help with the interest on mortgage ... So maybe that's worth doing ... Even if it's £50 it will help.

I don't mind scrimping and scraping if it means we keep the house .. I guess I'm just a little gutted as the extension would have made things a little more easier to manage.

So you can afford the mortgage then. That is the key.

Head over to the consumer action group forums, there are some very helpful people dealing with this sort of thing all the time.

It depends how much we are talking regards the unsecured debts. For now though, your main priority should be paying the mortgage.

Keep your home.

Alot of people say it might be easier to just walk away and start a fresh. But if you can afford it, which if by affording means you cut down on food spending and don't pay a few credit cards, then you can keep your home.

Once it gets to court hearings, potential eviction dates, the stress will rise 10 fold.

Good luck.

inspector_gadget_3

Fearlessdukuman ... By affording I mean after paying everything including cccs and full mortgage ... We would be left with £300 for four of us .. For food, clothes, petrol, emergencies, pocket money etc.
Cccs would not accept this as enough to live on when It comes to the upcoming review, and would take us off the DMP so our debts (30,000) would have to be paid some other way. IVA or bankruptcy isn't an option as we have equity in our house. Couldn't they force us to sell?

I spoke to NR for over an hour today and got told they turned it down on grounds of affordability at pension age (it would go over about 5 months)and insufficient evidence of state pension??? Didn't know what evidence to send!

The chap I spoke to, spoke to various people while I was on the phone and came back and said he got told the problem is we are already on interest only so that's the lowest we can pay ... I had to explain we only had 24,400 on interest only and around 32,000 on repayment. It was the £32,000 we were trying to extend! The 24,000 is due to paid off in 3 and 5 years with the two endowments we have finishing then! I asked if they had taken this into account with our affordability in future years. He went away again and said It is being reviewed and he has noted all the circumstances so they can see them and we will get a call soon ... I won't hold my breath for a change of mind!

Thanks again for your help :-)