Mortgage Payment Holiday or Similar?

bigspender01_2

Hi,

This is my first post, so I hope I'm in the right place.

My problem is that I have been off work for 5 months due to depression (I am bi-polar 2).

At the end of April I will have been off for 6 months, so my sick pay will drop from full pay to half pay.

I am living to every penny of my income...i.e. yesterday was payday, and most of my direct debits went out today. I keep a spreadsheet, and it tells me that when my Mobile bill goes out on the 7th, I will be £7 over my overdraft limit (i.e. -£1507). On top of that is the banks charge and interest for using the overdraft.

So, I'm going to need to take some money from our joint account to make things add up on my sole account. This is every month!

So, I go to half pay for May onwards, meaning my paypacket at the end of May will be 50% less.

I have no room for a £10 pay cut, let alone 50%.

(I am married and my wife works, but even including her salary in the calculations doesn't help due to commitments from hers and the joint account).

I am going to be £850 a month worse off. I am not allowed to return to work until my Occupational Health Dr and my GP say so.

We could make cutbacks - Sky, BT etc, but none of them would make up the £850.

We both need cars for work. I thought about selling my car (and then getting another when I go back to work) but my car is in negative equity (by about £1800) so wouldn't help.

So, we obviously need to keep paying the mortgage. Trying to be sensible about the situation I spoke to my mortgage lender and explained the situation (i.e. half pay coming up) and asked if they could help me out for a few months until back on full pay. I asked about payment holiday etc (I understand that this would have a long term effect on the mortgage, and I'd probably need to extend the term).

They went through an expenditure exercise with me. My wife pays into an endowment policy. As soon as they heard about that, they said they wouldn't help because she should cash that in to get the money.

We looked into it - it matures next year, and although its current value is more than enough, cashing it in early will forfeit an £8000 bonus that will be paid on maturity.

So, although it is an option as a last resort, it is exactly that - a last resort due to effectively losing £8k.

I've spoken to a mortgage advisor (a friend) who informed me that they can't take the endowment as savings, as its an investment, and a financial advisor wouldn't recommend cashing it in early due to the loss of bonus.

Another option we thought of was re-mortgaging elsewhere and consolidating other debts (loan, credit cards, overdrafts). Spoke to their mortgage advisor (the new lender) today and he said he couldn't help, because we'd have over £5000 early redemption fee to pay on the current mortgage, and some of the credit cards are on 0%, so he couldn't advise we moved mortgage.

So, I'm going to phone the (current) mortgage provider back and be more forceful. I've also done a complete expenses list, which I didn't have last time.

One option we are also looking into is a family loan, in the knowledge that we will have the money when the endowment matures to pay it back.

Any other tips or advice would be appreciated.

Thank-you

Kevin

bigspender01_2

bump......

kingstreet

Are you paying the full payments on all your other credit commitment, specifically the loan, credit cards and overdraft?

Contact a debt charity like stepchange.

http://www.stepchange.org/

and do a SAR in conjunction with the debtfree wannabe board;-

http://forums.moneysavingexpert.com/forumdisplay.php?f=76

You will be advised to prioritise your commitments, so you keep the roof over your heads and keep your family fed and warm.

This may mean payment arrangements with your unsecured creditors, possibly a debt management plan and markers and defaults but you will not lose your home.

bigspender01_2

Thanks.

Paying all mortgage payments (haven't missed any) and also paying full payments on the loan, but only the minimums on the credit cards. Also have car finance- paying full on that as I need the car.

Did the step change online form and they recommended a payment plan, but I need to ring them.

Don't know what SAR means?

kingstreet

Sorry, got data protection in my mind.

It should be SoA, or statement of affairs. It's basically a budget to show what you've got coming in and what you have going out.

Rollinghills

Would you be in a position to take on a lodger or 2 even to help with bills? First 4,250 pa is tax free. Many people do it, maybe not ideal but hopefully only needed for a short term.

Family loan might be a good option, and I would definitely try not to cash in the endowment policy, 8k is a lot of money to lose.

kingstreet

Have you checked if this bonus amount is guaranteed at maturity?

In my experience terminal/final bonus reflects undistributed profits which are still paid on surrender and depending on the investment conditions, could be higher now than in twelve months (if markets fall inbetween times).

bigspender01_2

Thanks for the replies, I was just on the phone to the existing mortgage provider.

Regarding the SOA, I'll look at it to see if I've missed anything, but I've done a complete breakdown and it shows that when I go onto half pay we will be over £600 short each month.

We've talked about a lodger, but it is something that we would desperately try to avoid as we would lose all privacy in our house...although at some point beggers can't be choosers!

Looking like the family loan (or even my wife getting a personal loan) might be the only option...in the knowledge it can be cleared next March.

When she phoned up the company that do her endowment, they said it was currently worth £20k if she cashed it in now. Obviously they couldn't guarantee its value next year, other than estimating, but they definitely said there was an £8000 bonus if it matures. I think its due to the issue of endowments not reaching their original target.

So, just been on the phone to mortgage people. Explained the situation again and the guy went off to check. He came back to me and I told him about the endowment, and the extra info about losing the £8k (didn't know about that last time I rang). He went away again and came back with the same answer.....no help! (at least he was personable though, not harsh like the last one).

I explained that if we cash it in now we will lose £8k and no financial advisor would advice us to do that (allegedly) and he said they weren't advising us to do so....but if the money is available then we should use it.

This really annoys me. Ok, the money is available, but due to the lost bonus we would be silly to cash it in now. All I am asking for is some help for a max of 6 months. I know it will build up more interest etc owing, but we could clear that from the endowment next year - we know the payments have to be made, just asking for help due to a "cashflow" issue.

They say they will help, but in reality they have no flexibility.

bigspender01_2

So I've spoken to StepChange this afternoon.

We went through my expenditure, working out my income and then my outgoings before unsecured debt (overdrafts, credit cards, personal loan) was taken into account - to see how much I had left each month to pay those debts with.

It came back showing, that even without those payments, I am short by approx £60 a month! So we went through the list and identified a few areas I could cut back on, i.e. package bank account, elec&gas direct debit amounts, mobiles and food. We managed to get it just into credit each month.

So, based on this, they recommend a Token Payment plan, whereby I offer the other debtors £1 a month each.

This is only a temp solution until I am back on full pay. It does exactly what I was hoping the mortgage people would do - allow me to pay less until I am back on my feet.

Still discussing the options with my wife, as this will affect our credit file, but it is a good option. So at least I know there is a way we can get through (assuming they would accept it!) if we can't get any help elsewhere (family loan etc).

Was up to 4am last night worrying about this, so hopefully tonight I can sleep better.

Thanks for all the replies.

Thrugelmir

bigspender01 wrote: »

This is only a temp solution until I am back on full pay. It does exactly what I was hoping the mortgage people would do - allow me to pay less until I am back on my feet.

You've approached the matter in the right way. Default on unsecured creditors first. Mortgage lenders will assist. However borrowers have to act responsibly themselves. Not just expect an easy way out of the mire. Your credit file is going to be damaged. So you'll have time to learn from the experience and get your finances back into order. Once you are better and back at work full time.

bigspender01_2

Thrugelmir wrote: »

You've approached the matter in the right way. Default on unsecured creditors first. Mortgage lenders will assist. However borrowers have to act responsibly themselves. Not just expect an easy way out of the mire. Your credit file is going to be damaged. So you'll have time to learn from the experience and get your finances back into order. Once you are better and back at work full time.

Mortgage lenders will assist? - NOT in my experience!

Borrowers have to act responsibly. - This is true, and is something I am definitely guilty of (letting it get this bad).

Not just expect an easy way out of the mire. - I'm not asking for an easy way out, just some short term help. I fully intend to pay everything back.

Your credit file is going to be damaged. So you'll have time to learn from the experience. - If we take the Stepchange option, yes. And it is right - I am on a learning curve at the moment - all my own fault, but very hard.

The sad thing is...I'm 40, and should've learnt this years ago!