Changing to an interest only mortgage help please!

goldfink

hi - sorry its a bit of a long one

i have been with alliance & leicester for 2 years with a fixed repayment mortgage

the fixed rate has just finished and as it happens i was made redundant in december and i have been struggling to pay the mortgage ever since as i still havent found a job.... i live on my own so no one else can help me with the payments. with my fixed rate my mortgage was £580 pm then when it finished it goes upto £685 starting 5 April

i phoned A & L last week to see if perhaps i could take a payment holiday to help me out. they said they couldnt do that but they could make it interest only for 2 months which would be £511 - they told me if i wanted to do this i would have to put it in writing.

i put it in writing to them but as yesterday hadnt heard anything so i phoned them. they said that my letter had gone to customer services dept by mistake and they have offered me an interest only mortgage on a full time basis and to wait for the letter. she agreed that i could pay £511 this month as quoted last week

i have today received the letter which i have copied as follows:-

I confirm that we have no objections to you changing your 01 account to an interest only endowment basis

the new mortgage payments would be approximately £366.61. these payments will be for the interest on your mortgage loan

the mortgage loan of £100,211.00 must be covered by a policy. it will be your responsibility to arrange the policy and ensure it remains in force throughout the term of the mortgage and is sufficient to repay the loan on maturity

an admin fee of £50 is payable when the rearrangement of your account has been completed



there is no explanation about this endowment policy and i have never had one so know nothing about them - where do i start please?

wymondham

If you'll only go Interest only for two months, then I would not have thought it worth looking into an Endowment policy?? Looks like a standard letter that does not really fit your temporary condition, although it does not mention it being for two months only (might be wise to keep an eye on this as the rate is lower than they said as well!) Hopefully come two months when it all goes back to repayment you'll have found a job etc.. good luck.

goldfink

they originally said on the phone that they would help for 2 months but my letter went to the wrong department (customer services) instead of the mortgage help department and they have ended up offering me an interest only mortgage indefinately (instead of the 2 months they were offering)

the thing is my house is up for sale anyway. i owe just over £100k and its been valued and is on the market for £155k - its been on the market for 2 months but has had no viewers as yet which i am putting down to current market problems as its a lovely house. so this would only be short term for me anyway

wymondham

fingers crossed for a quick sale!

sarkin

You dont know how long it is going to take to sell. Swithc to I/O until your property is sold and save your money.

If you start to struggle with payments you may get repossed before you sell.

About 25% of all mortgages in the UK are I/O so you may as well join the gang.

goldfink

thanks, but where do i go re this endowment policy? that was my original question - i know nothing about them

sarkin

Also phone your lender and ask if they have any fee free deals you can switch to which are lower than the SVR that you are on now. They may have a tracker rate that is BoE + say 1 %, which would be lower than SVR.

any way good luck

sarkin

Your selling your house you dont need an endowment policy. They have written a letter to inform you that you should take an endowment.

1 More commision for them
2 They are just covering thier !!!! backside

goldfink

oh so i dont need to bother getting one then? excellent!

can anyone else confirm this? no offence sarkin, appreciate your advice immensley. its just as i say i am new to all this!

sarkin

Click my profile I am a qualified broker, I dont post to get buisness so I dont shout about it.

goldfink

many apologies and thanks ever so much! xxxx