Urgent Mortgage advice needed PLS!

mortgagelurker

hello,

This is my 1st post, so please accept my apologies if i don't make any sense.

I bought my property just a year ago on fixed rate for 2yrs. Unfortunately due to a severe injury, I lost my job a few months ago and ended up on benefits. Now i don't have a problem at the moment paying my mortgage, but the Bank of England is pushing up interest rates very swiftly and my questions are:-

1. Next year when my mortgage fixed rate is finished, will i be allowed to change over to another fixed rate mortgage with the same bank or will the bank expect me to have a job in place by then? What i'm trying to say is if my circumstances remain the same and i don't come off the benefits, will the bank refuse renewing my mortgage to a new fixed rate?

2. If they refuse because i'm on benefits, what can i do to help protect myself from losing my house?

3. My interest rate currently is fixed @ 5.5%, but i have something called APR which is 7.9%...what is this and how does it affect me?

Thank you very much for helping me.

regards

MortgageLurker

*EssEncE*

It will depend on your existing lenders criteria when you come to the end of your current fix rate period.

For example, will they accept your only income been in the form of state benefit, such as Disability Living Allowance etc?

You haven't given much detail as to what benefits your currently receiving, so it's hard to advise further. Is it just state benefits or do you have an insurance policy paying benefit, if so what is the benefit term?

When do you expect you'll be fit enough to return to work?

If you can give further details on the above it will help.

As for switching lenders at the end of your fixed period, there are lenders out there who offer mortgages to those on benefit, but again have set criteria's and it will still need to be affordable in their eyes.

APR = Annual Percentage Rate - this figure gives you an overall cost for comparison on the estimated interest you'll pay over the full mortgage term, ie 25 years. Search the web for further details and explanations if need be.

mortgagelurker

I like a fool don't have any insurance cover. But Insurances can only pay i believe 12mths or less. Upto that period i don't have a problem as I have saved a little to make sure i'm well ahead.

I'm currently getting Income Support for myself. I hope you don't mind, but I have an injury/problem that i would rather not like to mention, but my GP has said that i won't recover for a long time, hence returning to work could be 4yrs+. I'm also getting carers allowance for my partner who is currently on permanant DLA.

*EssEncE*

The insurance policy your referring to is a short term policy, ie pays out upto a max 12 monthly benefit. There's a longer term option such as PHI (Permanent Health Insurance) these pay upto your return to work or age 65, which ever the sooner. But the latter option requires more detailed underwriting.

Anyways, enough about Insurance policies...

I appreciate you don't want to disclose certain information, but that is not required anyway, hence I didn't ask.

So you and your partners income is made up of Income Support, Carers Allowance and DLV.

You will find lenders will take into consideration only certain benefits and they might only then take a certain percentage of such benefit, ie 50%.

It's a case of speaking to a mortgage broker who sources the 'Whole of Market' to try and find you a lender who's willing to lend. When you decide to do this is up to you.

I wouldnt leave it too late as there's no guarantee you will find a lender, hence your in a catch 22 situation.

Who is your current mortgage lender?

In my experience I found mainstrem lenders such as Nationwide allowing certain benefits as income, see below extract

"State Benefits Specifically for the Disabled
There are several state benefits, which may be paid to a disabled person. The most common of these are:

incapacity benefit
disability living allowance
severe disablement allowance (due to be replaced in 2001)
Any benefits paid because of a disability, with the exception of Disabled Person's Working Tax Credit, may be treated in the same way as earned income, provided that the applicant can show a letter of entitlement, or other suitable evidence, confirming the amount being paid . We will only exclude a benefit if the applicant has been told that it's payment will cease on a stated date in the near future.

We will be cautious where payment of a benefit is subject to regular review as this suggests it could be withdrawn. Where the mortgage approver is satisfied that withdrawal of the benefit is unlikely we will treat it the same way as earned income in the Affordability Calculation.

Disabled Person's Working Tax Credit (DPWTC)
This is a Tax Credit to help people with an illness or disability who are in work. The tax credit will only show on a payslip, and not a P60. DPWTC cannot be used as earned income because it is subject to a review every 26 weeks."

I think you might find that your 'Income Support' won't be acceptable to be used as income with most if not all lenders, so that could damage your chances.

Worst case scenario would result in you having no option but to sell up and go in rented/council residence. But hopefully that won't be the case.

What figures are involved approx? eg. Property Value / Existing Mortgage Debt / Benefit Income.

What is the current term on your existing mortgage aswell?

mortgagelurker

i'm not sure if i can combine the DLA of my wife with my income, but including approx £45pw of my partner's DLA, i get a total income of approx £351pw.

my term of mortgage is 20yrs and i'm currently with T.M.B.

property was bought for £90,000 and a mortgage of £80,000 was taken out. I have paid approx £7000, leaving me about £73,000 still to clear.

*EssEncE*

Sorry mortgagelurker, but what is the per week figure minus your Income Support. As previously mentioned you dont find many lenders happy to treat that on the same basis as earned income.

I would try locate a reputable mortgage broker and discuss it further with them.

The affordability aspect is the key and it might well be you can only use your wifes benefits as income for the mortgage. Although you never know IP might be okay with a lender im not aware of. Maybe homer_j could shed some light?

Im quite sure TMB dont look at benefits in the same light as Nationwide for example. So if circumstances dont change, you will have to remortgage with another lender.

Off top of my head, lender's like Future Mortgages etc might look at this. But they don't deal direct with borrowers and therefore you can only access them through a broker. Other specialist lenders are out there, im sure your broker will know who to try.

homer_j_3

I think that EssEnce has suggested the right course in seeking advice where your circumstances can be fully considered.

I may suggest that you speak to an IFA rather than a pure mortgage broker as they will be able to fully assess your financial circumstances rather than just your mortgage.

Where in Yorkshire are you EssEncE

*EssEncE*

West Yorkshire :T

The home of the National Media Museum.

:rotfl:

homer_j_3

Not the city that when spoken has 2 "t's" in it but not when written!! Im just the other side of Skipton!

*EssEncE*

Indeed, we like our TeTley Teabags

Are you close to that village the locals pronounce Coaling and not "Cowling"?

I used to live in Sutton-In-Craven and found their accent strange.

Don't say you live in that town close by named Burnley :rotfl:

homer_j_3

my wife lived in sutton in craven for a few years but no longer. We live in the town of the bradshaws!!!