Help!! Stuck in Interest only hell and need advice

S21bon

Hi there, 
Bit of background... house purchased in 2008 on self cert interest only mortgage. 

Mortgage is £386,000, property now valued at £600,000, ltv is 64%.

We have been out of our tie in for some time and are now paying base rate which has now gone up by £120 in the last month alone with the rate rises.

The issue we have is hubby is self employed, due to covid we had to take mortgage payment break and are now £9,000 in arrears, hubby was only entitled to 4th government grant as new business.
We know we could significantly reduce our mortgage payment of £1377 if we were to remortgage however, because of now poor credit rating we have no idea what to do. 

We feel like we are stuck in this current mortgage because we wouldn’t get another for the amount on salaries.

How does it work - does someone have to give us a mortgage for the amount or are we completely stuck paying over the odds??

Is there someone that we can speak to give us financial advice for everything as in money management, where they would look at everything incoming/outgoing and advise how to manage, what to do??

feeling utterly overwhelmed like there’s no way out. 

We do not want to sell as rest in our area is more than mortgage and as business is run from outbuilding we would have to pay for business premises so this is not a viable option as would cost more.

We are happy with interest only as intention is to downsize when kids are older and buy outright with equity held in property.

Thanks for reading and any advice  

Bon

MWT

You may want to talk to Step Change about your general financial position and see what advice they can give you.

Re the mortgage, even if your mortgage is part of a closed book, it doesn't look like you'd qualify as a mortgage prisoner for the modified affordability criteria as you have not kept up the payments.

... and no, another lender is not obliged to ignore their affordability criteria if you are looking for a new mortgage.

Sorry this isn't more hopeful, but do talk to Step Change as a start, it is free and it may help give you some direction. 

steampowered

Interest only mortgages are hard to get these days for property you live in, most mortgages are repayment.

You could even find that your monthly repayments are less on a repayment mortgage than on interest only, as the rate will be lower.

Have you tried speaking to your existing lender to see what other products are available? You could also try an independent mortgage broker.

S21bon

MWT said:

You may want to talk to Step Change about your general financial position and see what advice they can give you.

Re the mortgage, even if your mortgage is part of a closed book, it doesn't look like you'd qualify as a mortgage prisoner for the modified affordability criteria as you have not kept up the payments.

... and no, another lender is not obliged to ignore their affordability criteria if you are looking for a new mortgage.

Sorry this isn't more hopeful, but do talk to Step Change as a start, it is free and it may help give you some direction. 

Thanks for your reply
can I just ask, we have always spoke to the mortgage company regarding issues and it has always been by agreement, we have not just missed payments per se.
does this still count as not keeping up payments? I’m completely confused.....
the rest of the criteria regarding mortgage prisoners definitely fits our situation.

MWT

S21bon said:

MWT said:

You may want to talk to Step Change about your general financial position and see what advice they can give you.

Re the mortgage, even if your mortgage is part of a closed book, it doesn't look like you'd qualify as a mortgage prisoner for the modified affordability criteria as you have not kept up the payments.

... and no, another lender is not obliged to ignore their affordability criteria if you are looking for a new mortgage.

Sorry this isn't more hopeful, but do talk to Step Change as a start, it is free and it may help give you some direction. 

Thanks for your reply
can I just ask, we have always spoke to the mortgage company regarding issues and it has always been by agreement, we have not just missed payments per se.
does this still count as not keeping up payments? I’m completely confused.....
the rest of the criteria regarding mortgage prisoners definitely fits our situation.

Have you been sent a letter by your lender confirming your 'Prisoner' status?

If the payment holiday was a pre-approved payment deferral as part of the corona-virus measures then yes, you could still qualify, so it goes back to the letter question and if you didn't get one you will need to figure out why.

Which lender is it, and how long is left on the mortgage now?

 

S21bon

MWT said:

S21bon said:

MWT said:

You may want to talk to Step Change about your general financial position and see what advice they can give you.

Re the mortgage, even if your mortgage is part of a closed book, it doesn't look like you'd qualify as a mortgage prisoner for the modified affordability criteria as you have not kept up the payments.

... and no, another lender is not obliged to ignore their affordability criteria if you are looking for a new mortgage.

Sorry this isn't more hopeful, but do talk to Step Change as a start, it is free and it may help give you some direction. 

Thanks for your reply
can I just ask, we have always spoke to the mortgage company regarding issues and it has always been by agreement, we have not just missed payments per se.
does this still count as not keeping up payments? I’m completely confused.....
the rest of the criteria regarding mortgage prisoners definitely fits our situation.

Have you been sent a letter by your lender confirming your 'Prisoner' status?

If the payment holiday was a pre-approved payment deferral as part of the corona-virus measures then yes, you could still qualify, so it goes back to the letter question and if you didn't get one you will need to figure out why.

Which lender is it, and how long is left on the mortgage now?

 

No letter received.

lender is Bank of Ireland, we have around 11yrs left (without getting papers out) 

I really appreciate you taking the time to reply, thank you!

I’m going to make an appointment with an independent mortgage advisor for some advice.

MWT

Never hurts to explore your options with a mortgage broker.

It might help frame the conversation if you took a look at your credit reports using something like https://www.checkmyfile.com/

It is free for 30 days and will let you see how/if your lender has reported the deferred payments.

I'm wondering if at least part of the 'holiday' the lender granted was not actually part of the corona-virus provisions, this should be clear on your credit report as the corona virus holiday should not have been reported.

dimbo61

So your not going to be able to swop from one Interest only deal to another lender on Interest Only terms.
Did you set up a Repayment vehicle to pay off the mortgage in 2008.
You have lived in a property for 14+ years and only paid the Interest on the debt but it has gone up in value by £214,000 in that time.
So either carry on paying the IO mortgage till the end of the term or sell now and downsize to a smaller property.
You could overpay every month to reduce your debt 

Thrugelmir

S21bon said:

We feel like we are stuck in this current mortgage because we wouldn’t get another for the amount on salaries.

Then you need to revaluate everything. As appears you are living beyond your means. In 11 years the mortgage will need to repaid. Time is ticking away. Interest rates are likely to rise. Costs generally are on the rise. No easy solutions. Just difficult decisions that only you can chose. 

ACG

Interest only at the best of times is difficult. For the last 5+ years it has been quite difficult - we do not do them anymore.

With current mortgage arrears you are going to struggle, I have no idea what rate you are on but if we assume around 4% you are not going to get anything better. Assuming they show as arrears on your credit report. 

If you did not have the mortgage arrears you might have been able to get a new mortgage on interest only at reasonable rates but even then I am not 100% sure they would have been under 2%, possibly closer to 3%. 

You ma be able to switch products with BoI, but the may prevent you doing that until the arrears are caught up and even then they may still not allow it. 

First port of call as suggested is to get you your credit report. If you have arrears showing, then your not unlikely to get anything better than you have/may be able to get with BoI. 

[Deleted User]

Bank of Ireland are still trading as a prime lender.  What have they said about doing a product transfer to a better deal?