Morgage woes

RowaN

Is it possible to get a mortgage with no income? Please read on..

My 15 years of employment came to an abrupt end last October as I was made redundant. I haven't found another job and have been floating by on savings and redundancy pay. That is rapidly running out however. I have £31k left to go on my mortgage.

My plan is to move back in with one of my parents, and rent my place out, and live off of that. So far so good, except the sums don't really work out. I'd get £750/month rent, but I'd be paying out around £689 (£609 morgage + £80 service charge). That'd leave me £61 to survive on each month, which isn't enough. Especailly as I would like to make a contribution to my parents for letting me stay there too.

So, I want to reduce the monthly payment of my mortgage by extending the term (currently it has about 5 years to go), until I can find work. My current provider HSBC won't entertain the idea of doing this however, because technically I have no income. So, I'm stuck. What HSBC can't seem to comprehend is that I WILL have an income, if they let me change the mortgage term, so that I can rent it out. Catch 22?

I am not claiming any benefits of any kind at all. Never have, and don't want to in future either.

Any advice much appreciated. Thanks in advance.

andrewmp

Ignore my post, didn't read the bit about you not wanting to claim any sort of benefits.

Good luck!

foxwales

Your lender may or may not permit the house to be rented under your existing agreement, so tread with caution.

Becoming a landlord also comes with responsibility and is a financial burden.

You will struggle to find any lender whom will lend to you when you have nill income.

Are your parents in any position to help cover the mortgage repayments until you can find work and then you pay them back?

Have you discussed a payment holiday from your lenders? considering how much is left outstanding on the mortgage I would say you are low financial risk.

If you have redundancy, can you not make a lump sum repayment against the mortgage as a gesture, which may buy you some breathing space whilst you claim benefits for your sustenance.

ACG

If you want to let your property out you will need a BTL mortgage.

You can put that on interest only meaning your income will be more (However your mortgage will not be paid off).

For BTL mortgages there is the odd lender who requires no income (which is effectively what you will have as most will not count the income from that property as income unless you were a professional landord).

andrewmp

ACG wrote: »

If you want to let your property out you will need a BTL mortgage.

You can put that on interest only meaning your income will be more (However your mortgage will not be paid off).

For BTL mortgages there is the odd lender who requires no income (which is effectively what you will have as most will not count the income from that property as income unless you were a professional landord).

You can also get consent to let with your current lender (sometimes).

I'm guessing he's already looked into that hence the fee he mentions in the original post.

I'm not sure what the answer is really, other than take back out some of what he put in. I appreciate he doesn't want to do that and that's his choice and he's fully entitled to it.

Foxy-Stoat_3

Sell the property and buy one outright and rent that out. No interest or mortgage payments and take 100% of the rent (less tax and fees)...living the dream...?

RowaN

Foxy-Stoat wrote: »

Sell the property and buy one outright and rent that out. No interest or mortgage payments and take 100% of the rent (less tax and fees)...living the dream...?

That would be the logical thing to do. But after 13 years living here I am emotionally attached. Its a nice location and I want to hang on to the property. With "only" £31k to go on the mortgage I feel like the end is in sight. (bought for £80k in 2001, now valued at £175k in 2013).

Thanks for all the advice guys. I will go to see HSBC tomorrow and see what they say. I only spoke to them on the phone so far and in hindsight I don't think I properly articulated my plans.

The service charge fee I mentioned is what I pay to the residents association each month - I gather I would need to keep paying that once I rent out. The tennant would be responsible for all other bills (utilities & council tax).

Are your parents in any position to help cover the mortgage repayments until you can find work and then you pay them back?

Technically perhaps yes, but I don't think they would want to. If I had a job prospect on the horizon I might feel differently but I really am not sure how/when I will get back into work. I was a project manager for 4 years but I don't think I could face going back into such a stressful role.

Have you discussed a payment holiday from your lenders?

Yes, but that would just shift the problem by a few months ... the amount of paperwork involved.. well hunting for jobs would probably be a better use of my time.

Morgage_Confused

I have an idea. Rent out a room to a lodger. You get somewhere to live and some contribution from lodger to the mortgage. It might give you enough time till you can find another job.

RowaN

Morgage_Confused wrote: »

I have an idea. Rent out a room to a lodger. You get somewhere to live and some contribution from lodger to the mortgage. It might give you enough time till you can find another job.

Good idea but its only a studio flat, only room for myself.. just about!

ethank

You need a plan very soon. Your savings and redundancy pay will not last for ever.

No lender is going to consider what you want to do an acceptable risk, as if you cannot prove you can support yourself as well as your mortgage, they are not going to risk the money. Asking HSBC to extend your mortgage term because you don't have a job? How do you think that sounds to a lender?

I work in HR and I know how redundancy can affect people, however you really need to remember it is not your right to receive the benefit of a mortgage, and a lender wants to take an acceptable level of risk. Given the sorts of things that happened at Northern Rock and Bradford & Bingley - no lender is ever going to allow you extend your term so you can make more of a profit. It is in their interest for you to repay ASAP.

ethank

You should also note that HSBC tend to be one of the most risk averse mortgage lenders. I have two current accounts, an overdraft, a credit card, and just paid off a loan with them.... they still would not give me a mortgage!