Meeting mortgage payments

poindexter

Hello,

Apologies if this is the wrong place to post.

I lost my job almost three years ago. I got a pay-off which helped us pay the full mortgage (about £700) for two years. When the money ran out, the Building Society was helpful, agreeing to what amounted to interest only plus a nominal amount off the capital.

We increased the capital element after a few months, so we were paying approximately £200 interest plus £50 capital per month.

I got a six week temporary job recently and told the Building Society, who not unreasonably asked for the full mortgage payment. But they made it clear that when the job finished, they would want to renegotiate and on much less favourable terms. They are apparently concerned about our ability to clear the mortgage when we become pensioners in eight or nine years. Our house is worth about £180,000 and we owe about £50,000.

It happened with my dad. He bought his house for £5000 in 1970 and after a second mortgage still owed £10,000 40 years later. His Building Society agreed to what amounted to interest-only payments but the house was worth £120,000 so he was happy with the arrangement, we sold the house, paid off the mortgage and still ended up with enough to share out. Thanks Dad!

My question I suppose is: if we are paying the interest due, plus a small amount off the capital, are we in a position to argue with the Building Society that we are meeting our commitment and, even if we die with the mortgage not paid off, they will get their money back and our kids will still get a reasonable legacy.

I hope I've explained things in enough detail for some advice from you good people.

DandelionPatrol

You do not want to be ducking and diving when you become pensioners. You need a sound and realistic plan where you either owe nobody nothing when you retire or you have new finance in place to cover the debt which you can sustain on the initial terms.

You may need to downsize.

Thrugelmir

poindexter wrote: »

My question I suppose is: if we are paying the interest due, plus a small amount off the capital, are we in a position to argue with the Building Society that we are meeting our commitment and, even if we die with the mortgage not paid off, they will get their money back and our kids will still get a reasonable legacy.

You are not meeting the regular payments under the terms of your mortgage contract. Therefore you are in breach of the terms and conditions. The lender therefore holds the power. Lenders will not act unreasonably. However you have to face up to the fact that if you are unable to repay the capital at the end of the mortgage term you may need to sell the property. Downsizing now may be a prudent option. As rising interest rates may well cause you financial distress. A comfort zone of £50 is totally insufficient. A 2% rise in interest rates for example would wipe that away and leave you more money to find.

poindexter

Thank you both for taking the time to reply - sorry about the delay.

Thrugelmir

poindexter wrote: »

Thank you both for taking the time to reply - sorry about the delay.

Hopefully you will find a solution to the issue.