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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 14:04

@LaurieFairyCake I'm really sorry about your DH.

I would say you have mortgaged yourself to the hilt because your mortgage is unaffordable (your BTl will be included in that affordability). I assume you have had the house a while with low periods of low rates. Lots of people overpay in those circumstances but obviously not everyone can but to not have anyone insurance against illness is a gamble if you need two salaries to pay a mortgage.

Your repayment is 1.9k, can yo7 improve your salary at all?

Dibblydoodahdah · 17/08/2023 14:04

How much equity do you have in your current home OP? If you let us know, people can suggest cheaper areas where you may be able to move to.

Peony654 · 17/08/2023 14:05

Wait whilst I get my tiny violin out. You have two houses, you have zero right to complain.

RB68 · 17/08/2023 14:05

what a load of financial ignorance there is.

Go and see a Broker and give them all the information to find you a solution. You may have to refinance both properties but the income on the rental should also count as income on top of whatever you guys are earning together.

Check the % equity to current market values and also examine if you tipped it over the 50% somehow whether you could get a different deal.

I would perhaps try a couple of brokers to find one with some financial savvy.
It also may mean raising the rent on your second property for now as well so don't rule that out if possible.

lovewoola · 17/08/2023 14:06

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

How much your flat, it must be at least 700k so you have the option of a cheaper area...

Original poster
LaurieFairyCake · 17/08/2023 14:07

Peony

I don't own 2 properties, the bank owns them until the mortgages are paid

I own the right to repay a mortgage, not quite the same

OP posts:
CandyflossKaren · 17/08/2023 14:08

You say it's up to £800 a month?

Original poster
LaurieFairyCake · 17/08/2023 14:09

lovewoola

Nope, we bought the buy to let 3 months before DH got sick

Altogether we have about £380 ish of equity

OP posts:
caerdydd12 · 17/08/2023 14:09

LaurieFairyCake · 17/08/2023 14:07

Peony

I don't own 2 properties, the bank owns them until the mortgages are paid

I own the right to repay a mortgage, not quite the same

But you could sell the BTL and use the equity to pay down the capital amount on your main residence? Making the repayment lower each month.

lovewoola · 17/08/2023 14:09

And how much deposit did you buy down?

lovewoola · 17/08/2023 14:10

Altogether we have about £380 ish of equity

Where do you live that this & a small mortgage couldn't buy you something? I'm in SW London

lovewoola · 17/08/2023 14:11

Sorry, how much deposit did you put down on the BTL?

lovewoola · 17/08/2023 14:11

Did you buy it during covid & the stamp duty reprieve?

Original poster
LaurieFairyCake · 17/08/2023 14:11

There's no equity in the buy to let and there's penalties if we redeem the mortgage within 5 years (I think the deposit was £80k, added on to our current mortgage)

OP posts:
Original poster
LaurieFairyCake · 17/08/2023 14:12

Unfortunately we paid £15k stamp duty - we have a loan for that (the only other 'debt')

OP posts:
lovewoola · 17/08/2023 14:13

So equity of BTL is 80k & 300k in main home?

Original poster
LaurieFairyCake · 17/08/2023 14:13

Roughly I think

OP posts:
lovewoola · 17/08/2023 14:15

-we have a loan for that (the only other 'debt')

You said you didn't have debt but obviously this is all impacting your affordability.

I'm baffled as to why you would buy a BTL with hardly any savings

lovewoola · 17/08/2023 14:16

How much mortgage will they lend you based on salary?

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

Multiple reasons - I have no pension, it was our last chance to get a mortgage, we had loads of equity in our current place for deposit, to help out a family member (who lives in it)

It seemed like a good idea at the time - actually it's not costing me anything so on paper financially it's STILL a good idea

OP posts:
Original poster
LaurieFairyCake · 17/08/2023 14:18

They might lend us £130-£150

A few months ago there were literally no mortgages so I think it's still a bit touch and go

OP posts:
lovewoola · 17/08/2023 14:19

I didn't want to ask about a pension because I suspected this might be the case.

lovewoola · 17/08/2023 14:19

It seemed like a good idea at the time - actually it's not costing me anything so on paper financially it's STILL a good idea

It is cosying you though, it's impacting your affordability

lovewoola · 17/08/2023 14:20

Costing

IWFH · 17/08/2023 14:20

So if I've understood this correctly - you increased your home mortgage to provide equity for a btl property. The BTL does no more than wipe it's own face (and given the current environment may well fall in price over the next ten years), and you are now struggling with the mortgage on your home?

So - sell the buy to let, then put the 80k back into your current house (reducing your mortgage amount and your monthly payments).