Can I go 'interest only' for a couple of years?

Miss_Moneysaver

Hi,


Long story, but I need to re-train due to my job moving away and the hours changing to unmanageable (for childcare). It is a very bad commute and I just cannot cope with it due to hubby being at work very early and no family assistance. I have exhausted all avenues such as union assistance (for a pay off) and transfer back to where I was. Almost 20 years in the profession so I am absolutely heartbroken.


I am, literally, without any income once I leave my job. I looked into tax credits and it looks as though we won't get anything. Hubby's pay covers bills but not food, car fuel or clothes etc. As a result, we can't manage. I want to re-train and would only get a small bursary of <£200 a month. Eldest child starts secondary school this September (bus ride across town - Catholic school) and, with that, comes more expense.


Mortgage is on a low interest rate and has 7 years to go. We pay £730 a month. We have a £30K endowment due to mature March 2017. We have thought about halving mortgage payments or going interest free for 2 years until I am back on my feet again. Is this possible? Would a bank go for this (we are with Barclays but it's a Woolwich mortgage)? We have considered down-sizing as we could probably get a 3 bed and have no mortgage (currently in a 4 bed detached in nice area).


We have 2 children to support so this is a very worrying time. Any ideas?

Doofs69

Any change in your circumstances will have a substantial bearing if your looking to alter your mortgage as effectively lenders will look at your current income and outgoings, and check affordability. Whats the tie in with your mortgage ?, are there any ERC's to come out of it ? plus the endowment part of £30k, needs some thought, as if you did sell, you would need to know what happens to your endowment part - discuss with your lender the option of selling and what impact it would have on this. Remortgage may not be an option if your salary supplements the existing mortgage.

Mortgage_Mark_2

You'd almost certainly struggle to get a 'new' mortgage in your current situation, unless the mortgage can be proven to be affordable purely from your husband's income?

Perhaps the best option would be to call Woolwich (who take care of Barclays' mortgage book, by the way!) and explain your situation, as they may agree to you paying just the interest for a period of time?

Miss_Moneysaver

We have overpaid in the past. I wonder if extending the term would work and then move it back after the 2 years?

TrickyDicky101

Your issue is not the interest - it's the term (as you allude to above). Does your mortgage have any facility within it to use previous overpayments for mortgage holidays or the like? I know mine with Nationwide permits this on one of my sub-accounts with them.

Given the relatively short term I don't think this would be a viable solution unless the bank allowed an extension (as your repayments would ramp up significantly following any period of no repayments).

Dave_Ham

Be mindful that the lender are not going to want to amend too much, as you are on an attractive rate.

Depending upon your ages, term extension will reduce payments dramatically (albeit it not in your long term interests) and you may consider (income allowing) getting onto a product elsewhere on a longer term is Woolwich do not play ball.

Best of luck