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    Mortgage payment difficulty advice
    • #1
    • 28th Jan 09, 1:50 AM
    Mortgage payment difficulty advice 28th Jan 09 at 1:50 AM

    We took out a mortgage for £236,099 with Nationwide in June 2008. The mortgage is over 25 years, fixed for 5 years at 6.23%; 95% LTV (i.e. 5% deposit). The current monthly payment is £1554.56 per month.

    This means that we have made 7 payments so far, totalling £11,947.55 (due to a higher first payment than the standard) of which £9458.22 has been interest, leaving a balance of £233,609.67. (So little paid toward the capital!)

    My wife is in regular employment at approximately £45,000 per year. I work through my own limited company (basically a one-man consultancy vehicle) and our accountant certified my earnings as £15,000 per annum (which, at the time, I viewed as remarkably stingy but now looks worryingly optimistic). Anyway, we were confident that we could meet the repayments even though it was a 50% increase over what we were paying as rent.

    Unfortunately, though my wife’s job remains as stable as ever (and is almost certain to continue to do so), I have been unable to find further work since my last contract ended in October. In reality, I grossly underestimated the worsening economic and employment situations. I felt that because I had always found it relatively easy to find work in the past and with a strong client-base, there was little reason why I couldn’t continue to do so. Even if the opportunities were to diminish, they surely wouldn’t dry up entirely!

    My wife reckons that we are currently living at about £700 per month beyond our means (financed almost entirely from credit) and obviously some radical cost-cutting surgery is imminent. I was hopeful, having read about a new attitude from lenders toward borrowers in difficulty, that we might be allowed to shift to interest-only payments for a few months which, coupled with substantial personal economies, might allow us to at least break-even while I track down a job.

    We spoke to Nationwide and, firstly, we can’t go interest-only (due to a high LTV and other more technical reasons). However, we can ask for a “concession”. Basically, this would be a continued reduction in the monthly payment for an agreed period. So far, so rosy. If we complete and return an account of our expenditure, they will consider the concession. However, if at any point the total, rolling concession adds up to the same amount as our standard monthly payment then it will be recorded on our credit files as arrears. Lastly, once the concession period has ended, the amount conceded must be repaid again to an agreed schedule (6-12 months was suggested).

    This appears to mean that we could ask for a £500 per month reduction for 3 months without arrears being recorded (and have to pay back the £1500 thereby ‘lost’ to the lender over the following 6-12 months) or, equally, a £250 per month reduction over 6 months.

    I’m assuming the arrears being recorded on our credit files is not a good thing? (And such a strong negative would be like torture, albeit a mild form, given the effort spent correcting the data before we applied for the mortgage in the first place.)

    Even if I get a contract, I probably won’t see actual cash for two months, so the first option would only give me about a month’s clearance. The second option might be more realistic but £250 per month doesn’t seem like enough of a reduction to enable our credit cards to stop flexing (our current utilisation is around 50% but only because the damn companies keep putting the limits up whenever they are approached). What happens if I still don’t find work – do I just plunge into arrears hell? Certainly, I’d expect to find work soon but, given that previously I expected to find it instantly, I not currently keen to rely solely on my judgement.

    Clearly I’ve rambled on here and not asked many questions but I just wondered if anyone had any views as to the leniency and suitability of the lender’s solution and the possible credit-worthiness related effects?

Page 9
  • jamief
    I'm not really sure what kind of magical bullet the OP was expecting when he came here.

    Not willing to cut expenditure. (seriously, anyone who says "I'm not willing to cut Sky down beyond...." deserves NO help. You DO NOT need football, and that is coming from a lifelong football fan. If I had to give it up to help towards a huge mortgage deficit, I most certainly would).
    Not willing to seek alternative employment.

    Well, what is left? I can't really think of anything. Maybe get some new credit cards and keep hoping that working on an Open Source project will bring in the money. Whilst working on a O/S project is commendable (I do the same), surely the time would be better spent looking for something that pays? The ONLY solution to your problem just now is to earn money - you can't do that by contracting, so you need to do something else UNTIL you find a contracting job. Either that, or your house will be repossessed by the end of the year.

    • clearing_out_my_pockets
    • By clearing_out_my_pockets 3rd Feb 09, 1:59 PM
    • 2,838 Posts
    • 17,901 Thanks
    Seriously, I think you ought to come over to the debt-free-wannabe board and post a statement of affairs.

    Even if you don't post, browse some of the threads and you may pick up some tips from the regulars.

    Oh, and if you cut sky sports, you could also get a part time bar job and make sure you're working when your team are playing.

    That's all the advice I'm willing to give as I note from a previous post that you support Arsenal... And I'm out of my 'area' anyway. I don't belong in the mortgages area!
    Don't worry about typing out my username - Call me COMP

    (Unless you know my real name - in which case, feel free to use that just to confuse people!)
  • barnaby-bear
    With respect the OP has been advised, on here, time and time again that a SOA and DFW is the way to go. For whatever reason he chooses to remain here.
    Originally posted by Kez100
    Ahhh but he hasn't had a LBM.....
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