Interest only mortgage and in a mess!

Kazzie1604

Hello

Wondered if anybody could offer some advice please?
I have IOM which was taken out 10 years ago. At the time I intended to change this to repayment as soon as I could. I am a single parent to 16 year old now and retrained in another career 6 years ago with the hope of earning a better income but the jobs weren't there and I had some health problems as well as hardly any help with maintenance for son as dad has gone to other side of world.
I am self employed but could earn more if I felt better but of course the 'things will get better' approach has not worked and now I have had a letter from mortgage company asking for details of how I intent to pay mortgage at end of term (15 years?)

I don't think I can remortgage this as income is too low (mortgage is 140k). I currently pay £293 a month and could prob afford a repayment on a fixed deal but I know I wouldn't be accepted. I also have £9000 on 2 credit cards and £4600 paying off a defaulted mbna card which I shouldn't have let get to that stage but I buried my head in the sand and let it get to a default which I know will be on credit file for 6 years!
My house has been valued at £300k and I gave been looking at downsizing to 2 bed but there is not much in price and I can't move too far as son still has 2 years of education. In years to come if my son goes off to uni etc I could prob move to a cheaper area but again I can't guarantee this will happen!
Any help would be appreciated....thanks:(

MortgageMamma

Hi Kazzie

You must be really worried but there may be options for you, how old are you and how long until state retirement age? what do you do for a living? there are lots of small details that need to be asked before anyone can give you an idea what you need to do.

I do think you need some professional advice in the long term but it can't hurt to throw a few ideas about for now

minimike2

When you say you could afford the amount needed for a repayment mortgage, have you looked at what these payments would be with your current lender, then made consideration to making up the difference in over payments, if your product allows?

You are right in saying you may not be allowed to transfer if the lender deems it unaffordable, but if your product allows over payments then there is nothing stopping you from doing that. The sooner you do it the less it will cost in the long run too.

Kazzie1604

Thank you for your prompt replies. I am 45 and am a self employed health care professional. Most of my work is home visiting which is where the bad back came from. I struggle to do long days now. If I was younger and fitter it would not be so bad. I have to be careful as had a disc prolapse and couldn't work for 3 months. I also can't really change job as I would be on an even lower pay probably and I have looked but it's not easy finding something that I would enjoy and pay enough to cover my bills.
Minimike2, I could look into paying extra..i looked at some of the mortgage calculators but I know my mortgage co is a higher rate. I suppose the difficulty I have is the credit card and other debt. It's taking £400 a month!

minimike2

It sounds like you need to sit down and look at a full review of all options and prioritise your debts to get you in the position you need to be.

You also need to look at your mortgage deal with the current lender to see what it allows you to do and if there are any alternatives, either with them or elsewhere.

You really do need a full review with someone - A broker might be able to help you and is probably your best place to start as we wouldn't be able to go into a full run down of all your options on here.

Delete33

Hi Kazzie, £400 per month goes to Credit Cards, stop paying them this much and overpay the IOM. :cool:

Kazzie1604

The £400 a month is the minimum on 2 cards and £156 fixed 0% payment on old mbna debt that I defaulted on so was taken over by Activ kaput all so can't reduce these monthly payments. The 2 card are both Barclaycard..one is 0% so is reducing and the other is 22% but only about 15 of ever £100 I pay goes to the debt and I can't change to any more good deals as credit rating has gone down. So it's a catch 22!

MortgageMamma

Kazzie, you can ALWAYS reduce your payments if you go about it the right way, and I agree with Minimike you need a full review with an experienced broker. It doesn't necessarily mean remortgaging, you just need someone with expertise to help you get back on your feet.

By the way I am just awaiting surgery for disc issues and inflammation of facets joints, there are days when I can barely walk or look after my youngest so I really sympathise. I'm not a health adviser obv but has your GP suggested corrective surgery or having epidural injections to ease the pain? if the pains affecting your ability to earn a living you rally need to address it, you are only 5 years older than me and its a young age to have to cope with such a limiting condition. It may be worth factoring getting it fixed as part of your long term plan to get on your feet again. You might feel a bit head bashed at the moment because of your financial situation but you are young enough to retrain to do a job less strenuous on your back

UKSBD

Kazzie1604 wrote: »

I have had a letter from mortgage company asking for details of how I intent to pay mortgage at end of term (15 years?)

Do they even follow up on these letters when you are that far away from end of term?


I had 2 or 3 of these letters over about a 2 or 3 year period but never replied to them and never heard anymore.


Admittedly it was only about £600 on an interest only mortgage on a £250k property, but would be interested to know what happens if you just ignore them?

nkkingston

Have you checked out the debt free wannabe boards here? They'll have some suggestions on how to reorganise your non-priority debts to save yourself some money each month that you could then put into overpaying the mortgage (you might be able to get the MBNA debt written off with a full and final offer, for example). Ignore the mortgage letter for now - the banks are obliged to send them out - and make a plan for two years from now, when the kiddo is out of full time education and you can make plans to downsize. If they do keep asking, tell them you plan to sell the house.

ACG

When I worked for a credit card company, if you allowed the card to go in to arrears they would agree to a payment plan on the balance. That was a good 7 years ago though so things could have changed.

Does your son have a job? At 17 my mum told me to go and get a job along side college. I had to pay her a few quid a month, nothing major - maybe £50 when I was earning about £700. She did not actually need the money but it got me in the habit of having to pay something and made some dent in to all the food I was eating :P. £50 overpayments would not make a huge impact on your mortgage, but every little helps as Tesco tell us.

Also, what are you going to do when rates rise? You are going to have to find the extra money then, so if you can find it when you have to then why not now? I do not mean that to come across as having a go, but I have seen people whos repayments have dropped massively overthe last 5-10 years and have not really done anything about it.

If all else fails, there may be the option of equity release in 15 years time.