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Original poster

So what happens if you CAN'T pay the repayment part of your mortgage in this situation?

145 replies

LaurieFairyCake · 17/08/2023 07:41

Citizens advice website says the lender is obliged to consider options if you can't pay - like shifting to interest only

A year ago we asked our lender to shift to interest only as there's enough equity to sell off our flat and pay off our second home (where we want to retire to)

They said no as we have to earn £150,000 a year to do that Hmm

Now we HAVE been allowed as the government has forced them to do it for 6 months

We want to keep that going and just pay interest only until we retire in 10 years, sell our flat and pay off our second home

Are they likely to let us?

(My health means that trying to do two jobs is too much for me and at some point I'm going to burn out and HAVE to shift into one job. We can't go and live in our second home and give up work as we're too young)

OP posts:
lovewoola · 17/08/2023 13:35

Why did your DH not go off sick first? Public sector is pretty generous in this regard

Original poster
LaurieFairyCake · 17/08/2023 13:36

Basically we don't earn enough to move mortgage providers - so I thought if we tried to remortgage with our lender the same criteria would apply

OP posts:
Original poster
LaurieFairyCake · 17/08/2023 13:37

Because DH would never do that - he thought he would recover quickly. He caught it in school and he's young (much younger than me) and was very fit

We can't extend our mortgage past 70 - I'm 53

OP posts:
Ohmylovejune · 17/08/2023 13:39

Would it be more affordable if you extended the mortgage so capital is being repaid but at a lower amount?

I've no idea what will happen to house prices but what would your situation be if they fall say 40% when you come to retire?

Isyesterdaytomorrowtoday · 17/08/2023 13:41

Do you have any equity in the BTL?

lovewoola · 17/08/2023 13:43

Because DH would never do that - he thought he would recover quickly. He caught it in school and he's young (much younger than me) and was very fit

This is insane, he got ill in school & despite no income protection, illness insurance or significant savings he walked away from his job rather than take sick leave.

What are you going to do in 6 months if you have to move off interest only? The reason I asked about the deposit on the BTL is because it might give you some breathing space & the market is not going to be buoyant again in 6 months time.

I do feel for you but it sounds like you mortgaged yourself to the hilt & assumed prices would keep on climbing & it would all work out. It also sounds a bit like your head was in the sand & I don't think that has changed.

Bemyclementine · 17/08/2023 13:44

Sounds like you need to downsize to a property you can afford.

Silvers11 · 17/08/2023 13:47

The buy to let is not in the South East, so it's very cheap rent - the income covers the interest payment (of I think about £400)

Wherever it is, £400 pm still sounds cheap? Too cheap probably? How many bedrooms does the property have? Would it help to up the rent for the BTL property?

Your affordability will be based on the money you are currently owing on the totals of BOTH your properties

Also, I don't understand why you didn't at least TRY to get a new fix with your current Mortgage Provider?

lovewoola · 17/08/2023 13:50

Personally I would downsize current house, might not be ideal but you want to move to your BTL at some point anyway.

You haven't said what your BTL deposit is but I didn't think you could get 100% interest only mortgages, most require at least a 25% deposit. You could sell that, use the deposit to give you breathing space & reduce your stress.

I know you said you don't want to move yet but presumably you get sell up main home & pay off BTL. Yes you will have to get another job but mortgage free takes off pressure

Tryingtokeepgoing · 17/08/2023 13:51

Phos · 17/08/2023 07:47

There is a huge interest only timebomb at the moment as so many people have IO mortgages coming to end of term and no viable repayment method. The regulators are all over this so obviously lenders tread carefully. If you want an IO mortgage, make sure your capital repayment is absolutely secure and watertight.

There are lifetime mortgages where you pay IO until you die and then the house is sold to repay the capital but it sounds like you’re too young to want to consider that.

The regulators have been all over interest only mortgages for nearly 10 years. There are 700,000 people with interest only mortgages out of roughly 8 million mortgage holders, so less than 10%, and that % has dropped sharply over the last 10 years I'm not sure there's that much of a time bomb...

Original poster
LaurieFairyCake · 17/08/2023 13:52

lovewoola

So not quite like that. He left the job because he was unwell for an easy low pay job fully expecting to go back in 6 months to a job that he same as before

He actually easily secured a job at an even higher salary than the one he left but a few weeks before he was due to start his lung collapsed during an asthma attack and he wasn't able to take the job

No one could have predicted he wouldn't recover - or that he would relapse. Realistically he's not going back to that work - and we have to move to accepting it

We had zero problems with our mortgage - no debt - nowhere near 'mortgaged to hilt' as the other poster says - was all fine and no problem until he got sick

Even then we were managing ok with the cost of living crisis as I took on a second job - until the mortgage went up and NOW it's too much

OP posts:
TheCrystalPalace · 17/08/2023 13:52

@LaurieFairyCake I'm afraid I haven't really got anything useful to add to your thread but I remember you on here from many years ago (name-change here and I think we used to live in the same-ish area). I'm really sorry to hear of your predicament and wish you all the very best in resolving it.

Silvers11 · 17/08/2023 13:53

Citizens advice website says the lender is obliged to consider options if you can't pay - like shifting to interest only

I don't know for sure - but I would suspect that would only be true if you only had one property. From their point of you you don't need 2 main homes to live in

Elsiebear90 · 17/08/2023 13:53

I think your current property is now unaffordable, you need to sell and downsize if you’re unable to find another affordable mortgage or switch to an interest only. I would be wary of interest only as a long term plan as if house prices go down you stand to lose even more money and you’ve been paying £1000 a month for no more equity.

TheFlis12345 · 17/08/2023 13:53

LaurieFairyCake · 17/08/2023 13:37

Because DH would never do that - he thought he would recover quickly. He caught it in school and he's young (much younger than me) and was very fit

We can't extend our mortgage past 70 - I'm 53

Are you sure on that last point? My cousin is 46 and just got a 30 year mortgage.

Original poster
LaurieFairyCake · 17/08/2023 13:54

We can't downsize, we live in a 2 bed flat.

Even if we moved into a 1 bed we wouldn't get a new mortgage (and we have kids who may need to come and live at different points)

OP posts:
Amboseli · 17/08/2023 13:54

We're on IO but we've had our mortgage since 2005. We couldn't afford to remortgage now as we'd have to have a repayment mortgage.

lovewoola · 17/08/2023 13:56

The interest only on my main property is £1000 approx a month - the repayment is over £900 in addition

So that's about 300k mortgage and you have 60% equity which is at least 400k?

Original poster
LaurieFairyCake · 17/08/2023 13:57

theFlis

Actually I'm NOT sure now, for all I know my lender is doing 30 year mortgages - probably worth me asking

And yes my friend has an IO mortgage - she earns 4/5 times what we do and pays way less in mortgage payments because she was allowed to take it out in 2011

OP posts:
lovewoola · 17/08/2023 13:58

The regulators have been all over interest only mortgages for nearly 10 years. There are 700,000 people with interest only mortgages out of roughly 8 million mortgage holders, so less than 10%, and that % has dropped sharply over the last 10 years I'm not sure there's that much of a time bomb...

Yeah you can't get one unless high earner & have a repayment vehicle this is a good change

Elsiebear90 · 17/08/2023 13:59

Your current property must be worth quite a lot of money if the interest alone is £1000 a month? Could you not sell and buy in a cheaper area?

Ohmylovejune · 17/08/2023 13:59

How long was the mortgage term in 2005? That's 18 years ago so should have just 7 years of a 25 year mortgage left? How many years have you had IO?

Ohmylovejune · 17/08/2023 14:00

Sorry! That was a different poster with 2005 purchase. Apologies

Oneweektogo2023 · 17/08/2023 14:02

You work in mental health and jobs in that sector are plentiful in every area. The only option you have is to sell up and move to your retirement property and get a job there. As you are now you risk losing both properties.

Original poster
LaurieFairyCake · 17/08/2023 14:04

Elsie

Can't sell and keep my job unfortunately - area dependant, nowhere cheaper

And they wouldn't give us a mortgage now

OP posts: