Help Please! I a mess with mortgage overdraft

edsa131

Hi hopefully someone can advise.  A couple of years ago I made the error of increasing my overdraft with the bank.  I got to the point that I simply had to pay it in order to get myself back on track with my finances.  I visited my local bank branch and spoke to an advisor.  She recommended that I use my mortgage overdraft to pay the overdraft and that I can pay the mortgage overdraft back gradually as long as it was paid before the end of the mortgage term, which is a good few years off yet.  I didnt learn though and I have ended up using £10,000 of the mortgage overdraft.  I was under the illusion that there would be no interest to pay on the mortgage overdraft.  I am making regular monthly payment transfers from my current account into the mortgage overdraft account, but the payments I can afford are hardly making a dent in the outstanding balance.

I am really worried about this and also things are uncertain at work.  I desperatly needs some urgent advise on what I should do to get the mortgage overdraft paid off as quick as I can.  I have thought of asking Woolwich to add the mortgage overdraft to my mortgage payments and increasing the length of term on the repayments, but I am just not sure what to do.

I cannot believe I got mysefl into this, but I am desperate to get back in order.  I would really appreciate any advice on how I should handle this.

Kindest Regards

E

[Deleted User]

edsa131 said:

Hi hopefully someone can advise.  A couple of years ago I made the error of increasing my overdraft with the bank.  I got to the point that I simply had to pay it in order to get myself back on track with my finances.  I visited my local bank branch and spoke to an advisor.  She recommended that I use my mortgage overdraft to pay the overdraft and that I can pay the mortgage overdraft back gradually as long as it was paid before the end of the mortgage term, which is a good few years off yet.  I didnt learn though and I have ended up using £10,000 of the mortgage overdraft.  I was under the illusion that there would be no interest to pay on the mortgage overdraft.  I am making regular monthly payment transfers from my current account into the mortgage overdraft account, but the payments I can afford are hardly making a dent in the outstanding balance.

I am really worried about this and also things are uncertain at work.  I desperatly needs some urgent advise on what I should do to get the mortgage overdraft paid off as quick as I can.  I have thought of asking Woolwich to add the mortgage overdraft to my mortgage payments and increasing the length of term on the repayments, but I am just not sure what to do.

I cannot believe I got mysefl into this, but I am desperate to get back in order.  I would really appreciate any advice on how I should handle this.

Kindest Regards

E

I think there are two things here.  1) This type of mortgage is not suitable for you.  Have you looked into changing to a repayment mortgage?  2) You are not budgeting correctly and therefore overspending.  To address 1 you could post on the Mortgages & Endowments board or seek the advice of a mortgage broker.  For 2, filling in a SOA and head down to the Debt Free Wannabe board.
https://www.lemonfool.co.uk/financecalculators/soa.php

yksi

Big emphasis on #2 above. You're spending more than you should be based on your income. That doesn't mean it's silly spending, but you desperately need to examine where your money is going and learn to make a whole load of small changes so that your finances are more comfortable. The DFW board has a lot of tips and tricks and is well worth your time. Rearranging loans is rarely the solution (or consolidating them). Fixing your spending habits is what you need to do.

edsa131

Thanks for the replies, much appreciated.

enthusiasticsaver

I am not sure what a mortgage overdraft is unless it is an offset mortgage where you are allowed to dip into the equity? Big mistake if that is what you have done but at least you recognise that now. I think you need to sort your budgeting and spending first then contact your mortgage provider with a view of overpaying the mortgage to start to reduce the amount borrowed. That is a priority if your job is looking uncertain. 

[Deleted User]

enthusiasticsaver said:

I am not sure what a mortgage overdraft is unless it is an offset mortgage where you are allowed to dip into the equity? Big mistake if that is what you have done but at least you recognise that now. I think you need to sort your budgeting and spending first then contact your mortgage provider with a view of overpaying the mortgage to start to reduce the amount borrowed. That is a priority if your job is looking uncertain. 

I think it's one of those current account mortgages that where offered back in the early to mid-2000s. I remember when Clydesdale Bank introduced them and I think they were popular in Australia, hence why they arrived in the UK via what was the National Australia Bank Group. In fact I think current account mortgages are still available down under. They could be good products IF you are disciplined with your money and had a fluctuating income. 

What I don't quite understand is why the OP has a current account mortgage and a separate current account. All the OP's cash should effectively be in one pot to reduce the amount of mortgage interest being charged. 

DCFC79

edsa131 said:

Thanks for the replies, much appreciated.

What action are you going to take ?

edsa131

I can pay back gradually and have already reduced spending and regular payments.  Just trying everything to reduce spending.  I cannot believe I let this slip.  My life over the past couple of years has not been good and I totally took my eye of the ball.  Instead of saying no to my wife on going on holidays that was too expensive I was going along with things.  It was that first time with the agreed overdraft that took me down the road.  I honestly believed the mortgage overdraft was interest free.  Once my car has been paid I will add that money to the mortgage repayments too.  I am going to contact Woolwich.  I tried to talk about it at my local branch but they just gave me the phone number for the Woolwich.  I did actually ring the Woolwich when I was starting to get concerned and I there was a language barrier issue and I don't actually think the lady understood what I was saying.  I will try contacting them again.  I was really buying my head with this and other stuff, but when it really hits you it is a real shock.  I had to speak to the doctor and I am on meds and getting counciling.

Thanks again