Need immediate help with adverse credit rate mortgage problem!

rosalind110

I'm sorry - this is a very long post, but I don't know how to tell the whole story in fewer words............

I have lived in my house for a total of 21 years, 19 of them with my first husband, and for the last 11 years, I have been solely responsible for payment of the mortgage and all other household bills. I have two extant default notices against my name one of which is a year old and the other four years old, but I have never defaulted on a mortgage payment and I currently have no bad debts at all.

A year ago, I bought out my ex husband's share of this £220,000 house at a cost of £161,600 and, because of my poor credit record, was only able to get an interest only 'adverse credit' rate mortgage. This was with the London Mortgage Company and involved a base rate of 4% per annum, a margin rate of 3.5%, a variable interest rate of 7.5% (which has of course risen in line with increased lending rates) and a variable discounted interest rate of 6%. Although it may seem that I should simply have sold up and bought a cheaper property, there were various reasons at the time, some of which still remain, why it was more economical and practical to remain in this house.

In January, my divorce came through and in February, I married my American fiance with whom I had been living for a year. Until we were married and all his visas and paperwork were in order, he was not able to seek employment in the UK and, now that he can, he has been completely unsuccessful in finding a job, even though he will undertake any type of work he can get. I am a civil servant of over thirty years experience and I earn a good wage on shift work, but my monthly income is only just sufficient to cover payment of the £900 mortgage and the household bills, and we have no safety margin whatsoever. We have barely survived various financial crises and there are times when I have had to take leave from work because I couldn't afford to travel there and back. The car insurance, tax and MOT are due at the end of the month, and, at the moment, it's hard to see how we will be able to deal with those.

This morning, completely out of the blue, I received a letter from the London mortgage company saying that the discounted mortgage period was at an end
and, as from the first of June (barely three weeks from today), my mortgage payments will increase by over £200 per month to £1111.17. There is no possible way I can find this extra money from my current income, it's too late in the day to move house, and even if I find a more affordable deal and switch mortgage lenders, a penalty charge will apply which we might not be able to meet in our current circumstances.

As you can imagine, I am pretty desperate because I stand to lose my house and everything I have put into it over a 21 year period, plus it would also ruin my credit record for yet another 6 years. Please, does anyone know of a way out of this or of any kind of special offer mortgage deal which would enable me to keep my head above water at least until my husband can get a job?

Thank you,

Ros

herbiesjp

Who is the current mortgage lender? What is the penalty if you have to leave them?

rosalind110

Our current lender is the London Mortgage Company, of Cheltenham and the penalty clause for leaving them is, I think, after one year, 2% of the total mortgage, although I cannot find the letter detailing the penalties.

Thanks,

Ros

herbiesjp

Due to the nature of the information, adverse credit, I've sent you a pm.

You might not want to disclose all your information on the open board.

gravitytolls

Get your original agreement out, surely they can't inpose such an increase just like that.

CAB may be bale to look at your paperwork, and advise a course of action. Also, use the weekend to search the web for something better. It may be better to pay the penalty of 2% to move to another lender who could lend over a longer period and at a better rate.

If you can apply fast, and get the credit checks done, you should already have an agreement set up before your credit rating changes anyway.

And maybe, if you've got an definate offer, you could borrow the extra from a relative/bank/card(if totally necessary), until the new monies have been transferred.

I can't see you having too many problems, if you've been financially managing since your original probs, and you've got plenty of equity in the house.

Good luck, let us know how you get on with this, I'm sure it'll be ok.