Fixed rate ended on my mortgage and now I'm really stuck

am_pm

Hi, I know nothing about mortgages and I'm so confused, I wondered if anyone had any words of advice or could point me in the right direction.

I've had a mortgage overall for over 10 years with no problems, I re-mortgaged about 6 years ago. The fixed rate ended on my mortgage and I was automatically switched onto the variable rate as of September this year. I called my mortgage company as the new payment was nearly double my old payment. They said they couldn't offer me any products and I would have to get a new mortgage, I asked for any options I had that wouldn't affect my credit rating.

They did an affordability form with me and suggested a temporary reduction of my interest rate and to switch to interest only for 3 months, which I did. I spoke to a mortgage broker who was unable to secure anything like the mortgage I needed as my income is now too low as a sole applicant, as I am now part time instead being full time when I have applied in the past. They said I would either need to apply with my partner, or increase my income.

I went away and started overtime at work to increase my income, I can only take the hours offered which means I haven't been able to increase my income quickly enough. Although I will look better on paper for my future Dec-Feb wage slips as OT is increasing. I considered applying with my partner, I am very reluctant to do this for a few reasons but in part because they currently have an outstanding debt with HMRC. The debt is wrong and they have been fighting HMRC about it for a long time already, but there is no chance that this will be resolved any time soon. 

I asked my mortgage company if they can extend the temporary arrangements  without affecting my credit, they agreed but only until the end of December. My credit rating was excellent until this month when my mortgage company put a default notice on my account and my score has dropped massively. They said they didn't process the temporary arrangement in time and would reverse the default as it was an error, but now I can't apply for anything at all until this comes off. Which is looking like end of December, which is also when my temporary arrangement ends.

I feel a lot pressure from the situation because I have no idea how to resolve it. Checking calculators with the amount I need and my new income I should be able to secure a mortgage on my own at a reasonable rate with payments similar to what I've had for the last 10 years. But what should I do in the meantime, should I suck up the variable rate until Feb when my bank statements/wage will be better and apply as a sole applicant then? Do I just cut back on all unnecessary expenses for these months to help my overall affordability? Or do I should I just apply with my partner and worry less about the HMRC debt?

I'm also worried I've done something naive by switching to interest only temporarily, I've only every been on repayment and I don't fully understand the impacts of this when it comes to taking a new mortgage. Is it safe for me to take a new mortgage out online or should I be dealing with a broker?

I'm quite worried about the whole thing and don't know what to do to fix it, thank you in advance for any and all advice anyone can offer. Ideally I just want to be back on a fixed rate repayment mortgage, I just cant pay this variable rate which has nearly doubled my payments. I'm sorry for long post, I have never used a forum before and didn't know how much to put!

sammyjammy

Who is your current lender?  With most lenders you should be able to change product without a credit check.

Its very unlikely that your overtime will be considered when looking at how much you can borrow as its not secure earnings and can reduce or stop with immediate notice.

If you can't move products it maybe you need to think outside the box.  Sell and downsize?  Look for a new fulltime job?

jlfrs01

I was in a similar position to the OP a few years ago when my fixed rate ended. By then, I had changed jobs and wasn't earning anything like the salary I had been when I took out the original loan with Halifax. I was put onto SVR which meant a big increase in payments and although Halifax had more attractive products, they insisted on doing an affordability check which I failed. I argued the monthly payments on SVR were actually higher than they would be if I took a new product from them with a more attractive rate but they simply wouldn't listen to sense - I guess this is a problem of dealing with a big lender.

am_pm you've asked whether being on an interest-only mortgage would disadvantage you when applying for a repayment product, the answer is "no", in fact you could be in a better position. You ought to be have a bigger choice because there are less lenders offering interest-only mortgages and if so, they want assurances of how the loan will be paid back. The only thing is you won't have paid off any of the interest on your current loan. You also asked whether it's best to apply online yourself or go via a Broker. Going it alone is fine if everything's straightforward but I'd recommend in your case to go to a Broker which will probably have access to more products than you do and save you a lot of time, it oughtn't cost you anything either. London and Country are a good firm, so are The Mortgage Brain (I've used both when my situation has been sticky). The should be able to advise on whether you go with a sole or joint application and the criteria each lender applies.

Hope this helps!

amnblog

am_pm

This has all gone a bit messy.

The fact that your current Lender is not offering you a new rate without reviewing the whole case suggests they are a specialist lender. Did you have difficulty using a high street lender when you took the mortgage? 

Going interest only for a few months should not be an issue and should not be impacting your credit file. As it has, you cannot look for a new Lender until that is resolved.

It seems that by February you will have a higher wage, and the credit file sorted. That would be the time to take action to re-mortgage. If your partner is self employed and has tax debt a joint mortgage does not seem an option.

You should use a Broker. Subject to affordability there will be options.