Interest only request and Kensington mortgages

rebeccaday

We are stuck with the awful company Kensington mortgages ( customer service crap) we have 1 default as Stepchange gave us very poor advice on paying DMP 3 yrs ago. Paid in full all debts 2 years ago. Have another 3 years on default / credit file . Mortgage needs renewing for 1st Jan 2023. Cost of living and bills for disabled daughters care lead us to ask Kensington to go interest only for 12 mths just while we pay for daughters weekly care and her Autisim assessment (4 Yr wait on NHS!) we also need just this year to make sure I’m not needing to take unpaid leave to look after her at any point. After the 12 months we won’t need twice weekly money for her care and I will be entitled by then to sick pay etc. Kensington said they would get back with an answer yesterday , so we called them they changed the advice & gave no answer , instead saying we must see a independent financial advisor ( Fi) to prove we have no wriggle room in our budget . Asked How we are going to cover the extra amount we accumulate onto mortgage going  interest free for 12/12?  We offered to send a very well written budget ( we old step change customers we know how to do a budget in our sleep!) but no- we have to source Fi. We said if we don’t get interest only for a year we will be forced to sell house at a very fragile time for my daughters medical and mental needs. Plus the market awful . We have a LTV of 50% ( we moved here to help her mental health) plus the new rate on offer is not affordable. Plus we stated to Kensington lady ( jumped up Madame!) hopefully the interest rate may be capped in a year so although it will still be high as we have 1 default still by then but not climbing & climbing. If not we sell the house in a year when daughters also had  a chance to recover better.,I have a Credit card debt of £2,500 we pay £120/mth . I assume I can’t balance transfer as it will effect mortgage application . Am I just going to call Kensington back & say “yes a Fi said we can’t afford care bills , mortgage rate hikes and so YES we DO need to go interest only for 12/12. & Once credit card paid off in March 23 We cd make large over payments on a interest only, leaving us at the least the £300 a month we desperately need to boost our budget for daughters care.or if I have to stop start work occasionally to care for her.  We just trying to not default on mortgage but Kensington have been the worse company we have ever had to do business with. We said you are forcing us to sell now, she said she could put a sellers pack in the post right now! Our broker is already filing a complaint about poor advice from 4 mths ago , he heard nothing.,

dunstonh

 instead saying we must see a independent financial advisor ( Fi) to prove we have no wriggle room in our budget . 

Strange request as that isn't what an IFA does in their core role.  Indeed, most IFAs have nothing to do with mortgages nowadays.   Maybe they meant a mortgage broker.    IFAs are fee based.  I would not be surprised at the fee being around £500-750.  Possibly vatable as well.

Our broker is already filing a complaint about poor advice from 4 mths ago , he heard nothing.,

The broker wouldnt necessarily hear anything as a complaint made on your behalf would see the responses come to you.    Some providers/lenders would cc the adviser but not all.

RelievedSheff

Sorry that you feel that Kensington are not being sympathetic to your case. For what it is worth our last mortgage was with them and we found them to be very helpful and easy to deal with. But that is by the by.

I think you need to set your emotions aside and come up with a constructive argument for your case to be offered on an interest only basis for 12 months based on facts and figures not emotive language. Also include how you plan to make up the shortfall in capital repayments once the 12 months is over.

Read back through the terms and conditions of your mortgage. I don't have ours to hand but I am fairly certain that there was a clause in the mortgage offer that we couldn't convert the mortgage to interest only.

silvercar

“ After the 12 months we won’t need twice weekly money for her care and I will be entitled by then to sick pay etc”

How do you know both these things will happen? Can you provide evidence to Kensington of these?

Snookie12cat

I sympathise with everything you have written, my son has ASD and it changes your life.
I suppose Kensington are looking at it as a matter of, how will you pay the capital back they are postponing for12 months? Everything you have written indicates that it is not a guarantee you will be able to as well as paying the higher interest rates. Wanting to take sick days to care for your child equates to unpaid leave for most (I dont know many companies if any who will pay you sick pay when you are well and your kid is not and if they do you might get a few days, not many) and this means less income coming in, not more, there is also the problem that what if she requires more care in 12 months not less and you cant work at all?
Not saying this will happen, but my ASD is not welcome in any childcare setting as they wont deal with his needs and there is no support for people in this situation, and therefore I had to find a job that allows me to work at home, in school hours and who don't care that I look after my kid in work time, or I would not work at all. I was very lucky to find this and doubt I ever will again. Depending on your child's age, you could very well face the same dilemma. When he was being diagnosed I missed hours and hours of work every week for months, to go to appointments etc - it was very hard going.

Anyway, they should be looking to help you in your difficult position, you are vulnerable and they have a responsibly to help. This help might not tally up with what you want however in going interest only - depending on the loan and interest rate it might not even save you that much. Have you thought about extending the term as long as possible to bring down the payments? Maybe consolidating your credit card debt into the mortgage if you can afford it?  Maybe you can speak to Money Advice Service?

Have you applied for DLA? Depending on her needs she could be eligible and that will bring some extra much needed money in? It will take a few months for a decision though so not going to help you right now. 

JMA74

I can completely sympathise with your situation. I also have a child with additional needs and its not easy having everything constantly on top of you.  You are obviously looking for a bit of breathing space financially. 

Unfortunately there has been a lot of issues with Interest Only mortgages in the past with people moving on to them and never being able to come off.  This leaves lenders in a difficult position with having another IO mortgage on their books and a client that cant afford to go back on repayment. In addition to this the payments that you return to will be higher as you have 1 year of capital payments to catch up on.   So unless you can evidence a clear exit plan then I dont see them delaying the inevitable.  What happens in 12 months if their rates are higher than they are now?  

Re the interest rate cap, being blunt, this is an unreasonable request.  We would all love to have a cap on our interest rates at the moment but unfortunately the cost of the lenders borrowing funds has increased and that increased cost gets passed on to the borrowers.   
A lender like Kensington also has to price in an expected loss due to arrears and that will probably be higher than a prime lender due to the type of business they do.   
In your case, by going on to interest only they are now not receiving income they planned to have. Multiply that up over however many thousands of people cant afford their mortgages in this market and their business plan is very different.  Interest rates will then go up across all of their products to cover the losses they are making by letting people go interest only.  Its got to be a carefully managed process as it has wider implications. 

When it comes down to it,  the regulator expects lenders to do robust assessments to confirm that going to an interest only mortgage is the best solution for a borrower. 

As a final point as you are recovering your credit report,  moving to interest only on a payment arrangement is likely to be reported to credit agencies and may have a long lasting impact on your ability to borrow at any reasonable cost.  Its essentially sending up a flag to future lenders that you couldnt afford your mortgage.   I've even seen in the past that some lenders will agree to the Interest Only but still record it as arrears on the credit report (as you are factually not making the payments as agreed at the start).  

A lot to factor in but hopefully you have a good broker on the case.  FWIW when they say FI, I assume they mean Mortgage Broker.  Not sure what they want from them but i cant see what a financial advisor could do to help in this situation.