AIBU to not take a mortgage holiday

[Cosycuppa]

I made a huge mistake several years ago buying a property with a friend. I invested 75% of the deposit and she invested 25%. We both pay down the mortgage equally each month, and our payments are very low. she is currently living in the property, and i rent out my room to her friend. I now have a newborn baby and I live with my husband in a different property which we are renting until my property with the friend sells.

We had a falling out about the sale, and had been trying to sell for 2 years before Covid19 struck. She communicates with my husband now instead of me because I have been pregnant and dealing with her emails about the house sale was causing me too much stress.

She text my husband yesterday to say she had been furloughed and wanted to have a mortgage holiday for 3 months, she sort of told us she was going to do it rather than asked me if I was ok with it. She told him it was madness not to take this ‘opportunity’
I know that our mortgage payments are very low, and I know what her furloughed salary is at £2,500 per month so can’t understand the need to take a mortgage holiday. I’ve also read several articles saying there will be impacts on people’s future credit ratings despite what the gov has promised. I told her I don’t want to take the mortgage holiday, because I don’t think we need it. She’s flown off the handle at me and said it’s madness not to take it. AIBU to tell her no?

It’s 2.5k max before tax.

Anyway, you don’t know her financial situation. I’d not block this.

You are not being unreasonable; whether you live in the house or not, you’re still the mortgage holder. The interest will still be growing on a monthly basis so ultimately you’ll be paying back more in the long run. I’m not sure re the credit impact but I am doubtful that it would be a meaningful impact on your credit report unless you defaulted. Banks are far too concerned with their relationship with government to jeopardise that over punishing customers who are in trouble due to COVID19

However - as you’re not close with her right now, you might not know her full situation. She might be in a lot of debt. She might have fully lost her job. Her company may be in a really precarious situation.

You have to weigh up what is more important to you - the financial aspect, or the friendship.

God, I hope you sell it asap. It would totally stress me out.

But you have no idea of her other financial commitments. I think you need to talk it through rather than say no without considering it at all. We have just decided to take a mortgage holiday even though we are both being paid a % of salary. Partly because things like our grocery shop is costing much more per week (lack of choice and children home from school) and partly due to uncertainty about my OH job (self employed). I think YABU to not hear her out.

“An opportunity” hardly, as it has to be paid back and with interest

It does not make any financial sense to take the three month mortgage holiday unless you (or her) are really unable to pay it. Interest is still being charged and your monthly payment will go up after the holiday to get back the money. Does she fully understand this? If your husband is happy to can he explain to her the advantages and disadvantages? She may still need the holiday for financial reasons.

Take the mortgage holiday.
Pay your 50% still - most mortgages allow overpayment of at least 10% of the remaining loan per annum.
Get an agreement drawn up that the additional interest incurred by the mortgage holiday on her 50% will be deducted from her equity when you finally sell.

If she's on 80% of her salary and is renting your room out & the mortgage is low why does she need a payment holiday? If your looking to buy soon and nothing is different in your circumstances or your husband's it's likely to be questionable why you needed a payment holiday, also the payments are rolled up so when you sell you will still need to cover the payments she's missed.

Speak to your lender & make sure they know you don't want a payment holiday, be careful though if they're not aware you have moved out and are subletting you could be in breach of terms x

OP a lot of people see the mortgage holiday as an all or nothing, if you can afford to pay something then you could suggest to your lender you pay what you can afford. In your case as your friend is on 80% of her salary would she be willing to compromise and pay say 75% of the mortgage?

Sorry posted too early. I meant to say if she would compromise and paid 75% of her payments and you pay your normal payments. This would mean overall the total payment is only 12.5% short ( if my maths is right).

Banks still have to agree a mortgage holiday. As both of your names are on the mortgage it isn't something that could be done without your consent.

If she needs the holiday then she needs to be responsible for the future interest.

Continue to pay your part.

She may not understand the future repayment implications.

What Ellisandra said.

Op I've been screwed out of money by someone I trusted too. You must be so pissed off.

Put the ball back in her court. I'd agree and appear to be casual. I'd also ask when she was available to get to the solicitors to get the paperwork sorted because I'd still be paying my share.

If she is furloughed it may well be only 80% of her salary or even less if she is a higher earner. My DH is losing 50% of his income so it's not always a walk in the park.

If the mortgage payments are low I cant see how 3 months is going to have a huge effect on you if you did have a break.

I also agree with Ellisandra.

I dont believe there will be an effect on credit rating, just no way this will happen

Changeofname79 lots of media outlets are warning against mortgage holidays , for anyone who wants to mortgage again in the near future (like I do once in no longer owning this with her)

While the Government has promised these payment holidays won't affect credit reports, it can't stop lenders from refusing to lend to borrowers in future. I don’t think mortgagr holidays should be taken unless absolutely necessary

www.thisismoney.co.uk/money/mortgageshome/article-8217063/Taking-mortgage-holiday-make-difficult-remortgage-future-experts-warn.html

The Guardian put out a warning about it this week

www.theguardian.com/uk-news/2020/apr/14/lenders-in-uk-grant-12m-mortgage-deferments?CMP=Share_iOSApp_Other

Yep, do what Ellisandra said

Getting an agreement drawn up about interest is easier said than done - the cost of it for one, but also just the stress of doing that. Our falling out was because her lawyer is her Mother; and it gets really messy and complicated every time we try to negotiate anything legal, for the sake of a few hundred quid relief for 3 months.

She may have credit card, store credit or overdraft debt. Talk to her and see if she genuinely needs this break or if she wants it just because it's there.

Does she realise that it's likely to cost more in the long run because the interest will still be charged for the three months when you aren't paying and you still need to repay the whole balance? It sounds like she thinks there is 'free money' on offer.

I agree that it's only sensible to take a mortgage holiday if you really need it due to the extra interest and, while it's not supposed to affect credit ratings, it's still 'on record' that you've taken it and the bank could take this as a negative in the future, especially as the mortgage is small in relation to your incomes.

In those circumstances you would expect to just keep paying out of savings or your reduced but still sufficient furloughed income and if you can't or won't, it's an indicator that you're not managing your finances well.

Your lawyer used to be her mother. Speaking from experience you need to man up and stop giving a shit what she thinks. That's her plan about you.

If she is a high earner with low mortgage payments will she not buy you out?

Seems she has a good tenant etc

Why don't you suggest that you pay the full amount for 3 months but this comes off her equity once the property sells? That way, she gets her break, the mortgage still gets paid and it wont impact no n any future mortgage application.

@cosycuppa this sounds like a right pain in the arse, sorry for the added stress your under. It would be easier to understand if you could give us some ballpark figures. How much is the mortgage a month and is it split between the two of you 50 50? How much is your room rented out for (is she suggesting that you give your lodger a 3 month rent break btw?) how long is left on the mortgage? How much equity including your share of the deposit do you reckon is in the property on the marketed value of the house?

Clearly house sales aren’t happening at the minute and if it’s already been on the market for 2 years you may well be in for a considerable wait for it to sell. Why do you think it hasn’t sold so far? Most times when a property isn’t selling it’s been over valued. You may need to lower the asking price on the other side of all this to get it shifted so you really need to work out your figures and see what works for you and balance up how badly you want to shift it. Could she afford to buy you out? If the rent is more than your share of the mortgage if she could raise the funds she’d be better off in the long run.

I wouldn't spend time or money on getting an agreement drawn up for what is hopefully going to be a very short term issue. If she hasn't even applied for a montage holiday yet it might end up that it's not even worth doing it.

It's very difficult, I can't think of anything that hasn't already been said.