Redundancy and Mortagage

pmfrench

Hi All,

Just wanted to share my story and wondered if anyone has any advice or has been through the same thing.

First I will say that this is VERY early days for me but I am panicing a bit. I have recently been made redundant after working in the one place for 17 years.

Me and my partner initially bought a house in 2001 and by 2007 it was paid off. Just over 3 years ago we decided to move and I took out a brand new, full term (27yrs) mortagage using a remortgage on our original property as deposit. The original property is now being rented out.

Now I know that if the absolute worst happens and I don't get another job then there will be a point when we can't afford the mortgage on our current house. We don't really want to move back to the old house as this would feel like a real step back and so an option is potentially to downsize and stay in the area - however, this is where I think there may be a problem.

If you want to move again, do you basically close down the old mortgage product and start a new one? If so then I'm !!!!ed if I'm not working. Or can you carry the original mortgage forward and essentially pay off a big chunk as a result of the money you free up by downsizing? (in which case we could be OK, but we'll probably incur a fee for paying off a big chunk which still in contact - we have a fixed interest rate for 3 more years).

I'm beating myself up right now for the decisions made in the past but there's nothing I can do now. Any thoughts or info on how this could play out (if I don't find a new job that pays sufficient to pay our bills).

Thanks all.

haras_nosirrah

you won't get another mortgage if you aren't working and also the income from the rental may mean you don't qualify for jsa income based

you will get contributions based for 6 months plus your redundancy payout which after 17 years I would imagine would be a decent sum. It may just be a case of stretching this out as much as possible and cutting your outgoings to the bone while you look for work

my husband is being made redundant at the end of feb after 12 years so we are going through the same however we have calculated that between his redundancy pay and his 12 months redundancy policy we are ok for 2 years. Does your wife work?

JimmyTheWig

I'm slightly confused. Do you currently have two mortgages?

pmfrench

@JimmyTheWig - We have a residential mortgage (for house I live in at the moment) and a Buy to let mortgage for the original place (this freed up cash to use as a deposit on the place we're in now).

@Haras - I think this is my big fear really - i.e. buying another house means getting a new mortgage which will be impossible if not working (why missus works but part time at the moment - she is trying to go full time but it's hard). We punched a little over our weight in terms of mortgage when we bought the second place (wanting to go for the nice house in nice area, over spare cash). Though it's not the end of the world, the original place was a real "starter" home and I'd rather avoid going back there.

I think I've made some poor decisions here clearly. I think now the banks are more careful about mortgages - I believe there is very long process to determine that you can definitely afford it before they give it. Definitely life lessons to take away here (shame I'm too old to probably benefit from them now )

haras_nosirrah

what is the rent compared to the mortgage payments on the btl?

thinking outside the box but if it came to it and you had used up all the money could you rent out your current house and rent yourselves somewhere else?

haras_nosirrah

or sell the btl and live off that money.

haras_nosirrah

[QUOTE=pmfrench;67589568

I think I've made some poor decisions here clearly. I think now the banks are more careful about mortgages - I believe there is very long process to determine that you can definitely afford it before they give it. Definitely life lessons to take away here (shame I'm too old to probably benefit from them now )[/QUOTE]

but at the time you could afford it - it is your circumstances that have changed. If the lender based affordability upon people being redundant then no one would get a mortgage. I don't suppose you took a redundancy policy?

pmfrench

Thanks for the responses.

Yes, I agree (about the affordability comments) but the better option when we bought again a few years ago would be to perhaps go for something smaller and cheaper that might still have been affordable should the muck hit the fan like it has. My backup back then was hanging on to the old house "just in case" but 3 years down the line, we would want to avoid this.

Even if we would have gone with the option of sell the old house, and put the whole amount against the new one then things would have been more affordable.

I'd given your suggestion (renting out our current house then renting somewhere ourselves) some thought, but the problem here is that the banks want to know (and if you're sneaky, once they find out then they go berserk).

It's early days, and I know I shouldn't dwell on the what could happen, when it might not even come to that.

haras_nosirrah

you can apply for consent to let after 6 months of living in the property - there may be an admin fee so worth checking out

pmfrench

Thanks Sarah

I will definitely be approaching the mortgage lender soon if nothing comes up, just so I am clear how this could work out. Time flies very quickly and whilst this is probably being a little pessimistic, I don't want to be caught out at the last minute.

Thanks for your responses.