Advice anyone...

whits_end_lass · 23 May 2016 at 10:41AM

When we first purchased our house 12 years ago we had a 20 year 88000 mortgage and very little worries. However due to various needs to the property and repairs etc we re-mortgaged the property four years later ( the final Mortgage is now 113,000.)
We used a broker for advice and he recommended a 'repayment mortgage' in that we only paid back the interest and then set a side an endowment policy for the repayment. We did so and put aside money in an ISA, on again the recommendation of the broker.
Two years later, my husband fell ill and was not able to work again. I had to pack in my job also to look after him.
The only income we have is from benefits which I absolutely hate, Having both of us worked since we were 14. The interest still gets paid on the mortgage, by the DHSs, however the low income we have means that we cannot afford to put any money into the ISA as recommended, and when the term of the mortgage runs out we have no money to pay the repayment amount. I lay awake at night wondering if there is a solution to our problem, apart from handing the keys to the house to the mortgage company at the end of the term of the mortgage. Any advice would be welcome, ideas anyone?. Though PLEASE no brokers, offering better deals.

David_White · 23 May 2016 at 10:46AM

whits_end_lass wrote: »

Though PLEASE no brokers, offering better deals.

So you would prefer anecdotal advice as opposed to something from a qualified professional?

Good luck with that :beer:

MortgageMamma · 23 May 2016 at 10:51AM

whits_end_lass wrote: »

When we first purchased our house 12 years ago we had a 20 year 88000 mortgage and very little worries. However due to various needs to the property and repairs etc we re-mortgaged the property four years later ( the final Mortgage is now 113,000.)
We used a broker for advice and he recommended a 'repayment mortgage' in that we only paid back the interest and then set a side an endowment policy for the repayment. We did so and put aside money in an ISA, on again the recommendation of the broker.
Two years later, my husband fell ill and was not able to work again. I had to pack in my job also to look after him.
The only income we have is from benefits which I absolutely hate, Having both of us worked since we were 14. The interest still gets paid on the mortgage, by the DHSs, however the low income we have means that we cannot afford to put any money into the ISA as recommended, and when the term of the mortgage runs out we have no money to pay the repayment amount. I lay awake at night wondering if there is a solution to our problem, apart from handing the keys to the house to the mortgage company at the end of the term of the mortgage. Any advice would be welcome, ideas anyone?. Though PLEASE no brokers, offering better deals.

You ask for advice and then say please no brokers, yet brokers are the only people qualified to give you a professional opinion. Have you had a bad experience with a broker?

Regarding your mortgage, you are indeed in a difficult position but without knowing the very personal details of your illnesses I can only give you generic information.

If you have a lifetime award of some kinds of benefit, ESA/DLA/PIP etc, some lenders will consider offering you a mortgage.. You don't say how old you are? Could you consider switching to a repayment mortgage but extend the term you pay it for to keep the payments low? Is there any way you can repay the mortgage by making overpayments?

Worse case scenario is when you get older and the mortgage term expires you cannot repay the loan. You would have to sell the property and move into a rent house if that happened. It may be worth considering extending the term of the mortgage now so you can stay in the property as long as possible. How much equity do you have in the property? could you sell up and buy a cheaper property with the proceeds?

AnotherJoe · 23 May 2016 at 12:59PM

whits_end_lass wrote: »

When we first purchased our house 12 years ago we had a 20 year 88000 mortgage and very little worries. However due to various needs to the property and repairs etc we re-mortgaged the property four years later ( the final Mortgage is now 113,000.)
We used a broker for advice and he recommended a 'repayment mortgage' in that we only paid back the interest and then set a side an endowment policy for the repayment. We did so and put aside money in an ISA, on again the recommendation of the broker.

An ISA is not an endowment.
The broker as you describe it, seems to have recommended an interest only mortgage, not a repayment. And strangely an ISA to pay off, which is not guaranteed. Even 8 years ago i find it strange anyone would do that. You may have grounds to claim you were missold. How much money is the ISA currently worth and whats it invested in?

Note that, roughly, the value of the IO payment plus the ISA payment will be the same as a single repayment mortgage payment , so if you cannot afford to pay the ISA payment now, then were you on a repayment mortgage, you couldn't afford that either, and would now be in arrears, so ironically what was probably bad advice (at least in retrospect) has bought you some time.

whits_end_lass wrote: »

The interest still gets paid on the mortgage, by the DHSs, however the low income we have means that we cannot afford to put any money into the ISA as recommended, and when the term of the mortgage runs out we have no money to pay the repayment amount.

But you'd have been in that position right now had you not been on a IO mortgage, because the DHS (isn't it now DWP but anyway...) will only pay the interest portion of the mortgage, you'd still have to find the repayment part.

whits_end_lass wrote: »

I lay awake at night wondering if there is a solution to our problem, apart from handing the keys to the house to the mortgage company at the end of the term of the mortgage. Any advice would be welcome, ideas anyone?. Though PLEASE no brokers, offering better deals.

Seems weird that you wouldn't want professional advice, but I think you may have to hand the keys back. At least you'll likely have some money back from the property when you sell.

whits_end_lass · 31 May 2016 at 10:46AM

Thanks for everyone who replied. The reason I did not want any brokers is for precisely that reason- I felt that we were missold- and as a result of which, I feel that the benefit of any new/changed/different mortgage is firstly to the broker. In that regardless of the clients long term benefit/background issues/problems or reasons- sadly 'greed' has a lot to do with it. And as a result I would yet again be recommended a 'deal' that would give the broker the biggest commission.
The very fact that the only persons who replied to my post all seemed to be brokers?

mrginge · 31 May 2016 at 11:48AM

Did you tell the broker that your husband would be falling ill and your income would be affected?

Floxxie · 31 May 2016 at 11:52AM

I'm not sure why you didn't want brokers to respond as they are the experts in mortgages

Mortgages and brokers regulations have changed a great deal since 2004!

Have you got an endowment or ISA? Check your mortgage paperwork as if it is an endowment you may have grounds for mis-selling. I believe there is information on this site about claiming. If it is an ISA you have, how much is it worth?

If you know that you are not going to have the money to pay the interest only mortgage back either on an ongoing basis or at the end of the term, then your choices are either to sell the property or continue living there and hand the keys back at the end of it.

MortgageMamma · 31 May 2016 at 11:59AM

whits_end_lass wrote: »

Thanks for everyone who replied. The reason I did not want any brokers is for precisely that reason- I felt that we were missold- and as a result of which, I feel that the benefit of any new/changed/different mortgage is firstly to the broker. In that regardless of the clients long term benefit/background issues/problems or reasons- sadly 'greed' has a lot to do with it. And as a result I would yet again be recommended a 'deal' that would give the broker the biggest commission.
The very fact that the only persons who replied to my post all seemed to be brokers?

You've probably just insulted every single person on this forum who could realistically help you.

I don't know what happened with your broker so I can't really comment on that side of things, but let me tell you, the procuration fee (commission) that a broker gets from a mortgage deal your size is so small we charge fees to supplement our service, so I doubt the amount of commission would have been a factor at all.

You don't get free advice in this world, someone somewhere has to pay for it be it a mortgage lender paying commission to a broker or a broker charging you a fee (as would an accountant, solicitor etc), or a government organisation paying its staff. You need to get that into your head, that any advice or service will cost you money directly or indirectly and that people need to earn a living by charging for services.

If you are not prepared to listen to the opinions of professionals because you blame another professional for your current circumstances you may as well go down the pub and get some advice there from well meaning but unqualifed people!

Thrugelmir · 31 May 2016 at 12:16PM

whits_end_lass wrote: »

Thanks for everyone who replied. The reason I did not want any brokers is for precisely that reason- I felt that we were missold- and as a result of which, I feel that the benefit of any new/changed/different mortgage is firstly to the broker. In that regardless of the clients long term benefit/background issues/problems or reasons- sadly 'greed' has a lot to do with it. And as a result I would yet again be recommended a 'deal' that would give the broker the biggest commission.
The very fact that the only persons who replied to my post all seemed to be brokers?

Not a broker. I do empathise. However you cannot blame others for your own misfortune. You made the decision to remortgage the property to release £25k of equity. Not can anyone have foreseen your personal circumstances detoriating. Through life we all make choices. Some right, some wrong, many of which we have no control. That unfortunately sums up life. We deal with the roll of the dice we are given.

Advice anyone...

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