Possible problems paying mortage

DinkyPunk

I'm looking for some impartial advice.

My partner and I work for ourselves. Business has not been doing so well this past two years (though thankfully it is just starting to pick up) and we've been dipping into savings to pay the mortgage but now savings are running out.

We tried to remortgage last year but the bank said my business accounts weren't strong enough (they weren't wrong). We could just put the house on the market and downsize but could do with staying here for another 3 years until the kids are out of full time education. Also, coping with a move and keeping out businesses going would be a nightmare.

We were thinking of calling the bank and telling them our circumstances so that we can renegotiate payments before our savings are all gone.

My worries are:
• Will the bank force me to surrender my savings before they renegotiate?
• Would the bank just tell us we have to move?
• Would we have to pay for a revaluation?

We could just keep our fingers crossed that the businesses continues to pick up but it's very stressful.

Any/all advice gratefully received.

Thrugelmir

The bank won't tell you to do anything. They'll monitor the situation and take the appropriate action once the arrears mount. Ultimately they'll seek repossession through the courts.

You are the ones that need to make decisions to keep control of the situation and minimise financial loss. While the options may not be particularly palatable. You'll feel better without the stress. Once on a downward financial slide it's often hard to claw yourself back up. As hard as one tries.

Trying_to_be_good

Have you asked about extending the term (which will reduce your monthly payments) or going interest only for a while?

Auntie-Dolly

Can one of you get a salaried job for a short time?

DinkyPunk

We tried to extend the term last year. It seemed like the perfect solution (we only have 3 years left to pay). They weren't helpful, at all.

We should maybe try again.

DinkyPunk

Thanks. This is my favourite idea! Bizarrely, it's actually harder than you might think though we are both trying and have been for a while.

Auntie-Dolly

Tell me about it. Me and my Husband were self employed for 12 years and finally agreed one of us would have to look for other work. It took me 18 months to find a job. We extended the mortgage from 3 to 12 years, but I really wish we hadn't done this. We are now both employed and back on an even keel.

Thrugelmir

DinkyPunk wrote: »

We tried to extend the term last year. It seemed like the perfect solution (we only have 3 years left to pay). They weren't helpful, at all.

We should maybe try again.

With only 3 years left there should be plenty of equity with which to fund a move.

Goldiegirl

If you are facing genuine hardship, the bank may allow you the reduce the monthly payments for s couple of months. But this is for short term hardship, and they'd normally expect you to make up the under payments in the immediately following months.

In your case, this doesn't seem to be a short term thing.

You will need to find a long term solution, such as extending the term of the mortgage to reduce the monthly payments, or selling up and moving to a cheaper house.

MerrilyA

Hello,

I think it's better to focus on fixing the business. What are the problem areas? How can they be addressed? Remortgaging will be a temporary fix.

Discussing things with the bank would be a good thing to do, perhaps a mortgage advisor and financial advisor as well. For the business side of things a business mentor/colleague who's doing well should be able to assist you.

DinkyPunk

Goldiegirl wrote: »

If you are facing genuine hardship, the bank may allow you the reduce the monthly payments for s couple of months. But this is for short term hardship, and they'd normally expect you to make up the under payments in the immediately following months.

In your case, this doesn't seem to be a short term thing.

You will need to find a long term solution, such as extending the term of the mortgage to reduce the monthly payments, or selling up and moving to a cheaper house.

Annoyingly, the mortgage that we have allows us to take a two month mortgage holiday every year. Apparently though the bank says there was a rule change and we now have to submit accounts before they would allow this. All very frustrating.

Thanks for your help