Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    incogni2
    Mortgage payment difficulty advice
    • #1
    • 28th Jan 09, 1:50 AM
    Mortgage payment difficulty advice 28th Jan 09 at 1:50 AM
    Hi,

    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 wifeís 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 couldnít continue to do so. Even if the opportunities were to diminish, they surely wouldnít 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 canít go interest-only (due to a high LTV and other more technical reasons). However, we can ask for a ďconcessionĒ. 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 Ďlostí to the lender over the following 6-12 months) or, equally, a £250 per month reduction over 6 months.

    Iím 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 wonít see actual cash for two months, so the first option would only give me about a monthís clearance. The second option might be more realistic but £250 per month doesnít 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 donít find work Ė do I just plunge into arrears hell? Certainly, Iíd 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 Iíve 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 lenderís solution and the possible credit-worthiness related effects?

    Thanks.
Page 2
  • beecher
    Oh well, best of luck with what you end up doing. People on the DFW threads would certainly help you to cut down from spending £1650/month after your mortgage but it seems clear you're not 'there' yet and don't see the need to stop your spending. I hope it all turns out for the best.
  • iB1
    How can one base expenditure on a worst case scenario? That would be if neither my wife or myself had work and both were unable to acquire any. We would have no income and would be unable to meet any obligation other than that funded from whatever the state was willing to provide. Assuming a worst case scenario would paralyse us (and, for that matter, anyone else) completely. Surely one should assume a likely scenario or a Ďworse than average but not entirely rock bottomí one?
    That's fine, but I still haven't seen what you're going to change to offset this £700pcm deficit? You can't go interest only, you can alter repayments for a short amount of time, but what if you don't get work for 3 months, and then that income averages out to the £15K per annum that your accountant initially suggested? If you ended up in arrears, then getting more credit could be problematic. I'm sure that you could cut down on Sky, alter the mobile contract and spend less on food in the short term to help you by


  • SouthCoast
    If I get another job
    Is the Depression word banned on this site?

    Assuming you are self employed here is another link:

    http://www.bdl.org.uk/
  • incogni2
    TotallyBroke

    Thanks for your ideas, I have turned them into headings and responded...

    Sky

    The cheapest tv mix I would consider is single entertainment pack + sports + HD. This would be £45.25 per month (and would save me £2). I cut movies, kids, music etc. several months ago.

    The cheapest broadband is capped at 2GB per month which is not acceptable (I probably use that in a couple of days).

    Telephone

    I'm currently on an 18-month contract at the second lowest tariff (£35), I will investigate switching to the lowest (£30).

    Currently, I keep the landline purely so I can use the ADSL provider of my choice.

    Council Tax

    Currently paid at a fixed rate due to changing location part way through the tax year. £150 per month charge (until April).

    Water

    I've prepaid the standing charge until June. It was less than £80 per year (due to lack of connection to main sewage).

    Electricity

    I will do as you suggest though all appliances are AAA rated, if that implies anything about draw while on standby.

    Major expenses are fish tanks which require 12 hour, high intensity lighting and 24 hour filtration, aeration and heating (compounded by the fact that there is no heating in the living room which means that several 300W aquarium heaters are continuously active).

    I also have 5 computers, the server runs continously (and needs to because it hosts my, and others, email). My computer is on a lot! The current power draw is around 400W as I speak but may peak at nearer 1KW (1.5KW if the others are on in the evening).

    The utility providers currently believe me to be in credit but I have taken meter readings and believe us to be £250 in debit. We really need to increase the current direct debits by around £100 per month.

    Thermostat

    Done - turned it down; although below an ambient temperature 20C "death risk begins" according to this article http://news.bbc.co.uk/1/hi/health/5372296.stm

    Food

    Actually, due to lack of space and the move we have almost nothing in the cupboard - only herbs, spices and condiments. (We only have a single food cupboard.)

    We are already both vegetarian so are onboard with the vegetable/pulse recommendation.

    It is my intention to save approximately £100 per month by buying fewer ready meals and dropping down a brand as you suggest.

    Thanks again.
    Last edited by incogni2; 31-01-2009 at 5:32 PM. Reason: fixed link
  • incogni2
    Assuming you are self employed here is another link
    Originally posted by SouthCoast
    I am not self-employed. I am employed by the limited company of which I am the major shareholder. (And I am the only employee.)

    I require the limited company in order to do my job (when I'm doing it that is).

    The link still applies, however. The business is currently about £400 in debt (credit card). This is without including the amount which I am personally subbing each month.
    • getmore4less
    • By getmore4less 29th Jan 09, 3:07 PM
    • 37,952 Posts
    • 23,514 Thanks
    getmore4less
    I thank everyone for their comments. It is however astonishing how one can ask a question about mortgage payments and receive so many answers relating to personal expenditure
    There was more than just the mortgage in the first post and the reality is that it is more than just a mortgage problem, the mortgage should be the last thing to consider defaulting on when dealing with debt(income less than outgoings)

    Looks like the pension needs to stay, you say final salary in one of the statements.

    Worst case/likely case either way I would look to budget/ballance the books on one(wifes) income and consider this as the norm for the longer term.

    Even if you get more work or another job this may not be that permanent, safe and reduce the debt levels to free up more money from the one income for lifestyle changes. Keep the long term commitments on the one salary and use surplus from seecond for one off's(holidays capital purchases) that have no long term commitment, get into the habit of earning/saving the money to spend, rather than spending and trying to earn

    Using debt to fund spends just increases costs(more interest) and it spirals quickly meaning you have to borrow even more the next month, get spends under control now and you will survive for much longer if not forever on one income.

    You have a chance to catch this now don't wait for 2 years borrowing on credit and find it impossible.
    • atlantis187
    • By atlantis187 29th Jan 09, 3:14 PM
    • 1,130 Posts
    • 471 Thanks
    atlantis187
    Why do you NEED to have sky sports?
    I used to think like u until I found this great site called www.!!!!!!!!!! they air all live football matches and other major sporting events.
    • TotallyBroke
    • By TotallyBroke 29th Jan 09, 3:28 PM
    • 1,494 Posts
    • 982 Thanks
    TotallyBroke
    TotallyBroke

    Thanks for your ideas, I have turned them into headings and responded...

    Sky

    The cheapest tv mix I would consider is single entertainment pack + sports + HD. This would be £45.25 per month (and would save me £2). I cut movies, kids, music etc. several months ago.
    £2 in your pocket is better than in Sky's. Do you really need HD from what I've been told you can't tell the difference at the moment because the technology is not at it's best yet.

    The cheapest broadband is capped at 2GB per month which is not acceptable (I probably use that in a couple of days).
    Would you really download more than 2gb to your pc? Maybe I'm being thick here but I thought downloads were songs and films etc.

    Telephone

    I'm currently on an 18-month contract at the second lowest tariff (£35), I will investigate switching to the lowest (£30).

    Currently, I keep the landline purely so I can use the ADSL provider of my choice.
    Keeping the landline is fine so long as you are only paying the rental and a couple of 0845 0870 numbers. No point in paying £30/35 per month if you are not using all your (free) texts and minutes

    Council Tax

    Currently paid at a fixed rate due to changing location part way through the tax year. £150 per month charge (until April).

    Water

    I've prepaid the standing charge until June. It was less than £80 per year (due to lack of connection to main sewage).

    Electricity

    I will do as you suggest though all appliances are AAA rated, if that implies anything about draw while on standby. Anything that has a light is using electricity. So if you are not using it turn it off.

    Major expenses are fish tanks which require 12 hour, high intensity lighting and 24 hour filtration, aeration and heating (compounded by the fact that there is no heating in the living room which means that several 300W aquarium heaters are continuously active).

    I also have 5 computers, the server runs continously (and needs to because it hosts my, and others, email). My computer is on a lot! The current power draw is around 400W as I speak but may peak at nearer 1KW (1.5KW if the others are on in the evening).
    You can get some clever devises that can reduce the computers outage when on standby have a look in other parts of the forum for what they are called or information on what people think of them.

    The utility providers currently believe me to be in credit but I have taken meter readings and believe us to be £250 in debit. We really need to increase the current direct debits by around £100 per month.
    You may not have to increase as in the next few months you will be going into summer (hopefully) so all your heating will be off and the costs will be spread over the year.

    Thermostat

    Done - turned it down; although below an ambient temperature 20C "death risk begins" according to this article http://http://news.bbc.co.uk/1/hi/health/5372296.stm
    I couldn't use the link but a lot of people have their thermostats set at 15-17 degrees

    Food

    Actually, due to lack of space and the move we have almost nothing in the cupboard - only herbs, spices and condiments. (We only have a single food cupboard.)

    We are already both vegetarian so are onboard with the vegetable/pulse recommendation.

    It is my intention to save approximately £100 per month by buying fewer ready meals and dropping down a brand as you suggest.
    You can easily save £100 for two adults on a £300 grocery bill. I'm spending £25 per week approx. for 1 adult 1 2yo still in nappies at £8 per pack.

    Thanks again.
    Originally posted by incogni2
    I do hope you nip things in the bud now by taking some advice from everyone. We are only trying to help. If you found the £700 that you think you are overspending now it would save you getting into worse trouble in the future.
  • ILW
    TotallyBroke

    Thanks for your ideas, I have turned them into headings and responded...

    Sky

    The cheapest tv mix I would consider is single entertainment pack + sports + HD. This would be £45.25 per month (and would save me £2). I cut movies, kids, music etc. several months ago.
    Originally posted by incogni2
    Beginning to wonder if this is a wind up.
    The OP says he is overspending by £700 each month, but cannot live without a £45.00 Sky package.
    Seems to be a case of "Head In Sand" syndrome.
    Good luck though.
  • Bambywamby
    Very similiar situation to my brother..."thanks for the advice but we will manage". A year later, bankruptcy and losing the house are very much a reality for him and his young family.

    People aren't judging you or lecturing you, they have been there or know people that are there and are trying to stop you from making the same mistakes.
    Before it's too late start taking the right measures, that will save your family their home. Get an another job (anything until your business picks up), cut back on anything that's leisure or pleasure if it costs and look at ways to save money, (starting with your food bill).

    Good luck, you will need lots of it until the light bulb switches on.

    X x
    *Frugal Living 2015* *Not Buying It 2015*
    "Twenty years from now you will be more disappointed by the things you didn't do than the ones you did do. So throw off the bowlines. Sail away from safe harbour. Catch the trade winds in your sails. Explore. Dream. Discover." ~ MARK TWAIN

    27/50
    • getmore4less
    • By getmore4less 29th Jan 09, 3:50 PM
    • 37,952 Posts
    • 23,514 Thanks
    getmore4less
    I am not self-employed. I am employed by the limited company of which I am the major shareholder. (And I am the only employee.)

    I require the limited company in order to do my job (when I'm doing it that is).

    The link still applies, however. The business is currently about £400 in debt (credit card). This is without including the amount which I am personally subbing each month.
    Originally posted by incogni2

    Looks like you have been drawing too much money from the business if it is in debt and does not have enough money to keep the the web services going.

    You want enough to at least keep it going for as long as you have commitments or the time it wouldd take to wind it up if no work came in say a years worth of running expenses.
  • incogni2
    Beginning to wonder if this is a wind up.
    The OP says he is overspending by £700 each month, but cannot live without a £45.00 Sky package.
    Seems to be a case of "Head In Sand" syndrome.
    Good luck though.
    Originally posted by ILW
    I suppose that you either regard football as an "essential" or you don't. I regard Sky as the pared down expression of that. Last season, when I had more income, I attended as many live games as I could (which with tickets, travel and a meal for my wife and myself was around £200 per game).

    Before the smoking ban, I also watched all live Arsenal games in the pub. Christ knows how much that cost in terms of beer.

    Getting Sky/Setanta was the extreme cost saving measure. I'm sorry that you don't understand; but there are hundreds of thousands (perhaps millions) that do.
    • getmore4less
    • By getmore4less 29th Jan 09, 3:57 PM
    • 37,952 Posts
    • 23,514 Thanks
    getmore4less
    A good measure of how bad things might be getting is to add up all the debts, mortgage CC, loans etc.

    How much has the total changed in the last year and each of the last 6 months and estimates for the next 6months.

    This will give you an idea of how much you are really overspending.
    • JayZed
    • By JayZed 29th Jan 09, 3:59 PM
    • 712 Posts
    • 595 Thanks
    JayZed
    Before the smoking ban, I also watched all live Arsenal games in the pub. Christ knows how much that cost in terms of beer.
    Originally posted by incogni2
    Do I take it from this that you're a smoker? If so, then presumably cigarettes account for a proportion of your outgoings?
  • incogni2
    Looks like you have been drawing too much money from the business if it is in debt and does not have enough money to keep the the web services going.

    You want enough to at least keep it going for as long as you have commitments or the time it wouldd take to wind it up if no work came in say a years worth of running expenses.
    Originally posted by getmore4less
    Yes, the business is essentially bankrupt. The website and online backup costs are fairly minimal but the ADSL (which I also use personally/professional) and insurance are rather expensive.

    If I wound the company up then I would no longer be in a position to seek the work I do, so I certainly wish to keep it going for as long as is possible.

    I don't know if I could cancel the insurance (or some of the insurances) in order to save money. I'm currenty carrying Professional Indemnity (£500,000), Public/Product Liability (£1,000,000), Employers Liability (£10,000,000) and Business Contents (£10,000). Although the figure is the second lowest, the Professional Indemnity is the most expensive.

    I may have legal obligations for some of this cover and there may still be claims against some of them (because this can go back years). I don't currently know if having been insured for the claim period is enough or whether I have to continue that cover.
  • incogni2
    I just get the feeling that you're hoping this will all go away without you having to change your lifestyle, and that isn't looking too likely.
    Originally posted by beecher
    Yes, that is precisely what I'm hoping. I accept that there is a high chance that my hopes won't materialise but the level of pessimism surprises me. When you say ďthat isnít looking too likelyĒ, what evidence are you basing your assessment on? The current lack of employment opportunities? The fact that Iíve been looking for nearly 3 months without success? Clearly there may be some probabilistic correlation between the amount of time spent searching and the chance of finding but Iím certainly not clear as to that connection. After all, what are my chances, say, of getting in job within the next few months? 99%, 1%, somewhere in between? I donít really know. All I can do is consider my skills, the apparent current demand for them, a reasonable knowledge of the marketplace within which Iím operating, conversations with various domain experts etc.
  • incogni2
    Do I take it from this that you're a smoker? If so, then presumably cigarettes account for a proportion of your outgoings?
    Originally posted by JayZed
    Yes, and again I'll be looking to cut this cost by around 1/3rd to 1/2. It is an easy target.
    • poppy10
    • By poppy10 29th Jan 09, 5:04 PM
    • 6,224 Posts
    • 7,547 Thanks
    poppy10
    Beginning to wonder if this is a wind up.
    The OP says he is overspending by £700 each month, but cannot live without a £45.00 Sky package.
    Originally posted by ILW
    You're clearly not a regular visitor to the DFW board.
  • ILW
    Yes, that is precisely what I'm hoping. I accept that there is a high chance that my hopes won't materialise but the level of pessimism surprises me. When you say ďthat isnít looking too likelyĒ, what evidence are you basing your assessment on? The current lack of employment opportunities? The fact that Iíve been looking for nearly 3 months without success? Clearly there may be some probabilistic correlation between the amount of time spent searching and the chance of finding but Iím certainly not clear as to that connection. After all, what are my chances, say, of getting in job within the next few months? 99%, 1%, somewhere in between? I donít really know. All I can do is consider my skills, the apparent current demand for them, a reasonable knowledge of the marketplace within which Iím operating, conversations with various domain experts etc.
    Originally posted by incogni2
    No offence, but if I was your wife I think I would be just starting to get a bit peed off with supporting you in the lifestyle to which you have become accustomed. Nothing wrong with a positive attitude but you do need to plan for the worse rather than just telling yourself something will come up.
  • SouthCoast
    Just out of interest, but what cars do you both drive and are they paid for?
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

592Posts Today

5,295Users online

Martin's Twitter