Halifax totally disinterested in remortgage despite 15 years without missing a paymen

tomnat

We have had a mortgage with the Halifax for last 15 years. We moved house 5 years ago and went back to a 25 year mortgage term to cover the increase in mortgage size (always had a repayment mortgage)
We have never missed a payment and currently have 67% LTV. We want to change to a fixed 2 year interest only mortgage as our son is at nursery and starts school Sept 2015, so we only want to do this to free up a bit of cash to cover the high nursery fees etc.
The Halifax advisor we spoke to on the phone was very dismissive and said unless we have enough cash or a repayment plan to cover the whole amount of our mortgage we didn't have even a remote chance of changing the mortgage. We tried to explain that we only want their 2 year fixed term deal as we will revert back to a repayment mortgage after the deal expires, we have no intention of staying interest only but he just wouldn't listen and just gave us a "computer says No!"answer!
I thought we would be in a good position with our payment history and LTV. Anyone else come across this?

brit1234

tomnat wrote: »

I thought we would be in a good position with our payment history and LTV. Anyone else come across this?

Things have changed since the credit crunch, interest only is now deemed risky so being phased out.

Thrugelmir

Paying on time is the contractual terms you agreed to. There's no bonus points for having done so in the past. Lenders will have their eyes fixed firmly on the future. Requesting a change of mortgage to interest only with raise questions as to how you manage your finances and indeed whether you are financially stretched.

Two years may not seem like long. However it will result in increased repayments once the 2 years is up. If the current talk is correct you would also be facing higher rates of interest. So your finances could still remain squeezed.

A time for a good spring clean of your finances. What else can you cut back on or indeed cut out entirely. Enabling you to maintain your mortgage payments. If it involves sacrifices so be it.

The Debt Free Wannabe forum is a great place for support and advice.

tomnat

Thanks for the advice, will cast my eye over the forum you suggest.

We have already spring cleaned our monthly outgoings and got rid of anything unnecessary as hubby likes to keep on top of stuff like that, we just thought that we would look into the interest only option as a couple of people suggested it to us. Luckily we are not struggling with debts but just wanted to make things a bit easier until he's at school as we'll be £700 a month better off then, so will be no problem when we wanted to go back to repayments. Think we may talk to a reputable financial advisor and see what they say.

dunstonh

We want to change to a fixed 2 year interest only mortgage as our son is at nursery and starts school Sept 2015, so we only want to do this to free up a bit of cash to cover the high nursery fees etc.

That is your first negative point.
During a period of low interest rates your budget issues suggest a lack of affordability if you need to switch to interest only to be able to afford it.

Coupled with the fact the regulator has told lenders that they cannot use interest only as a means to make a mortgage affordable.

I thought we would be in a good position with our payment history and LTV. Anyone else come across this?

Your payment history is a plus point. However, your budget issues, which interest only suggests are a problem, are big negatives.

whitewing

Will you be so much better off when he is at school, or will you still have some out of hours care, and what about school holidays?

Is it likely that you would have another child? (Most people I know don't have too big an age gap). Not that this would necessarily be something that banks would be able to take into account.

PeacefulWaters

Why should your mortgage lender subsidise nursery fees?

haras_nosirrah

The problem you have is because of other people being interest only and either not being able to repay at the end of the term or claiming that interest only was missold to them as it should have been obvious that they couldn't pay it back, the regulator has stepped in and made it so that interest only is not used for affordability purposes and can only be used if evident that the person can afford to pay back the whole loan as some people didn't seem to understand that interest only meant just paying the interest and they would one day have to pay the capital

While you are saying it is temporary until you are no longer have nursery fees, Halifax know that once you are on interest only they cannot force you back to repayment . What if at the end of two years you have another child or job loss or sickness or just generally can't afford to go back to repayment in two years.

No one knows the future and lenders have discovered that people cannot be trusted to make provisions for themselves if they have an interest only mortgage so will not allow it to happen unless they can cover their backsides by proving that at the time of sale the customer had the means to repay

BillJones

PeacefulWaters wrote: »

Why should your mortgage lender subsidise nursery fees?

It would not be subsidising anything, the OP is not asking for a mortgage holiday, with interest frozen, they are asking that the interest just accrue to be paid at a later date.

By your logic, anyone with an interest only mortgage would be being "subsidised" by their bak, when clearly that's not the case.

The bank declining it based on affordability worries is not them saying that they don't want to subsidise someone.

Goldiegirl

haras_nosirrah wrote: »

The problem you have is because of other people being interest only and either not being able to repay at the end of the term or claiming that interest only was missold to them as it should have been obvious that they couldn't pay it back, the regulator has stepped in and made it so that interest only is not used for affordability purposes and can only be used if evident that the person can afford to pay back the whole loan as some people didn't seem to understand that interest only meant just paying the interest and they would one day have to pay the capital

While you are saying it is temporary until you are no longer have nursery fees, Halifax know that once you are on interest only they cannot force you back to repayment . What if at the end of two years you have another child or job loss or sickness or just generally can't afford to go back to repayment in two years.

No one knows the future and lenders have discovered that people cannot be trusted to make provisions for themselves if they have an interest only mortgage so will not allow it to happen unless they can cover their backsides by proving that at the time of sale the customer had the means to repay

All of the above is so true.

The trouble is, borrowers tend to 'forget' they are on interest only, and at the end of the term of the mortgage, in spite of getting reminders from the lender, suddenly realise they have no means of paying the mortgage off. Then they run around in a panic, saying that 'someone' should have pointed all this out to them.

You might think the lender is currently being difficult, but they are protecting themselves, and you.

tomnat

PeacefulWaters wrote: »

Why should your mortgage lender subsidise nursery fees?

I wasn't asking my mortgage lender to subsidise my nursery fees, you seem to have got the wrong end of the stick and tbh I find your comment quite brusk and unnecessary.