Redundancy and mortgage advice - Please help!!

Shamzi71

Hello all,

I found out yesterday that I am to be made redundant after 10 years. I am absolutely in pieces and of course wracked with worry and stress. I only bought my new house last year so am still in my fixed rate 2 year term. I ran up a lot of debt while renovating the house and obviously now my circumstances are going to change, I don't want that debt hanging over my head and would rather sell, pay off what I owe and downsize. Will my mortgage lender still transfer my mortgage to a new, smaller property with the knowledge that I am going to be made redundant? Or will they not give me the 'new' mortgage now as I'm no longer a good candidate for a mortgage. I don't want to lose the mortgage because aside from having to pay an early redemption fee, I may well not get back on the ladder if I just sell up and rent or stay with family/friends until I have another job, or even maybe decide to go back and study or re-train. I haven't spoken to my lender yet and just don't know what to do! Any advice would be most appreciated.
S x

Pete111

Shamzi71 wrote: »

Hello all,

I found out yesterday that I am to be made redundant after 10 years. I am absolutely in pieces and of course wracked with worry and stress. I only bought my new house last year so am still in my fixed rate 2 year term. I ran up a lot of debt while renovating the house and obviously now my circumstances are going to change, I don't want that debt hanging over my head and would rather sell, pay off what I owe and downsize. Will my mortgage lender still transfer my mortgage to a new, smaller property with the knowledge that I am going to be made redundant? Or will they not give me the 'new' mortgage now as I'm no longer a good candidate for a mortgage. I don't want to lose the mortgage because aside from having to pay an early redemption fee, I may well not get back on the ladder if I just sell up and rent or stay with family/friends until I have another job, or even maybe decide to go back and study or re-train. I haven't spoken to my lender yet and just don't know what to do! Any advice would be most appreciated.
S x

Wow you appear to be making some massive decisions very quickly.

You will be entitled to a redundancy package and at least a 10 week notice period given your length of service - you may get this paid in lieu. Before you take any drastic steps you should quantify what your severence will be and consider how long this may last you in your current home with the usual bills etc. Do not speak to your mortgage lender just yet until you have had time to reflect with all the relevant info at hand - which should include examining your potential ability to find a new role in the next few months.

In parallel therefore, you should get your updated CV etc out there and start to look at new opportunities - even if it is for temporary or contract work. It is worth asking if your company will offer any outplacement services given your length of service also. If you decide you wish to retrain, make sure you look at the job availability and the likely earnings curve etc for your chosen new field - if you pick something that is unlikely to land you a future role or decent level of earnings you may regret it

Redundancy after a decade will be a major shock - take a little time to calm down and consider all the information & options before you make a rash decision you later wish you had not.

McKneff

Stop panicking, let it all sink in first.

You will have at least 10 weeks salary, and that much and maybe more in redundancy pay, along with any accrued holiday pay.

Dont make any big decisions for now.

You could well walk into another job yet.

Shamzi71

Thanks for your comments and I understand what you're saying and yes, I am panicking! The thing is though, due to the nature of the job I've been doing over the last ten years and the amount I got paid for doing not a huge amount I doubt very much whether I could walk into a job of the same pay level, in fact, I KNOW I won't . What I really need to know is, how is my pending redundancy going to affect me wanting to move house and is my mortgage lender likely to refuse to carry on with my mortgage at a smaller, cheaper property when they know I'm being made redundant?

Sycorax

It's unlikely that your mortage lender will see you as a good risk knowing you're being made redundant. They look at your ability to repay your monthly payments and if you have no regular income they wont look at that kindly.
It's unlikely they will transfer your existing mortgage unless they can be sure you'll keep up the repayments.

Mortgage lenders do not want to be stuck with a property, that's not their game, they lend money not buy and sell houses. They will assess the risk of this happening and if they don't like the look of it, they wont lend.

I suggest you do as the other posters advise. Don't panic, review your outgoings and what you'll get in redundancy, pay in lieu and (if push comes to shove) what you would get in other benefits and job seekers allowance after your notice period is finished. This may not be as bad as you think it will be, you may get some relief on mortgage interest payments via the Job centre if you still haven't secured a new job by the time your compensation runs out.

Also, should you get into financial difficulty your lender will look at ways to help you with this, mortage holidays, reduced payments etc.

So, in short, say nothing yet to your mortgage lender. go to them if you find you'll no longer be able to make the payments and see what they can then offer you.

Unfortuately the housing market isn't bouyant right now, it could take time to sell your property and then you've got legal fees, estate agents fees etc etc to pay. Not to mention it's unlikely your current property will have aprreciated sufficiently in value to cover those....

firesidemaid

agree with what other posters have said.

you could always rent a room out to help with mortgage payments, or go interest only.

mrobsessed

I'm in a similar position and it is a massive shock.

I blithely thought I could swap to a better mortgage to reduce my monthly costs while in the consultation period, but eventually realised it was impossible as any new lender will ring my employer and make thorough enquiries about the stability of my job and then reject me as a bad risk when they inevitably find out about the forthcoming redundancy.

I eventually found that my only option was swapping to a different scheme with my current lender (expensive if in a fixed deal) or extending the term of the loan to make the payments cheaper.

Extending the loan just requires a small fee (£30) and they don't contact your employer as they already have your debt so it makes no difference to them. They do ask about general debts and credit cards, but that's it. It also means you pay more interest so that is also good for them and bad for you. It's not a perfect solution by any means, but it is an option that can reduce the stress on your money in the short term. The rate can be changed again once you get back on track.

Hope this helps.