is this a mistake on mortgage statement?

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my friend asked me too look at her mortgage statement. she has paid £10K over the last 12 months but the figure on the statement is £6k higher than at the start of the year. she has no clue what her mortgage rate is or really anything about the mortgage, her STBXH arranged it all at the time and she has just been muddling through since he left. she really ahs no clue about any of it and admits to just binning the statements when they come in. this is the first she looked at and is shocked at what she saw. i also have no clue about mortgages but i guessed that it could be interest. but would there really be £16k in interest over a year on £178k mortgage? also, it says it's interest only so if so, not only has she not even taken anything off the borrowed amount but she isn't even clearing the full interest. can that be right? she's going to ring the mortgage company on monday but i said i'd try to find out if it sounded right.

Think there could be that much interest, depends on the interest rate, any arrears etc.

yes there are arrears. she has been thinking about selling for a while now and after seeing this statement (if it's accurate) she has decided she will always be chasing her tail and wont ever get it paid so she's going to sell. we are both just so shocked that her interest could be so much. it's killing her to pay what she is right now and to see that it isn't even enough for the interest was just a massive blow for her. i was hoping it was a mistake but i think she knows herself it isn't.

Even if you're on a repayment mortgage, in the early years the statements look depressing because your monthly payments mostly go towards paying off interest and the capital reduces very slowly. If she's on interest only her opening balance should technically be the same as her closing balance. But if there are arrears (penalties?) to take into account on top she could easily end up owing more at the end of the year than the start. Having said that, £6k is a heck of a discrepancy (£500 short a month?!!) and I'm amazed the mortgage company hasn't been in touch before now.

In her position I'd ask for an appointment with the lender first. See if the mortgage can be rescheduled in any way so that she can stop the debt rising. However, selling up would seem to be a good move.

She needs to speak to them. Interest only? She will never pay off the capital.

She let her STBEx sort it - presumably while he was STBX? V dangerous, I would have thought. With an interest only, you are supposed to save to pay off the capital at the end of the mortgage, I believe?

he was her DH at the time and without wishing to go into it, it was a very controlling relationship. he basically organised the mortgage and had her sign what she needed to. he then remortgaged just before he left her and she doesn't even know the amount it was for. she has an idea but not sure. she has been in court for a repossesion hearing and has been given a year to prove she can make the payments. tbh she is in a real financial mess. he refused to take his name off the mortgage or divorce her but also refused to pay anything towards it (he left 5 years ago and hasn't paid a penny since and has been declared bankrupt) she was desperate to keep hold of the house for the sake of the dcs and had been burying her head very deeply in the sand. it was only since the repossesion hearing that she is now trying to get a handle on things and she opened this statement to see how things sat. that's when she called me as she couldn't understand why it was £6k more than at the start of the year even though she had paid £10k through the year.

the amount has been altered several times over the past 3 years as she lost her job and couldn't keep up with it and then again when she still couldn't keep up. i have told her i think she should sell. the house wont get anywhere near what she owes on it but she'll not be at risk of repossesion if she sells and is renting. she's ringing tomorrow and i've told her to get as much info as she can about the mortgage. she really has no clue.

May I recommend the Emotional Abuse thread here where she will find lots of support, and people who understand how living with a controlling OH can really mess with your head and self esteem.

She doesn't need his permission to divorce him.

Can I suggest Martin Lewis Moneysaving Expert for absolutely anything financial.

Sounds like she has historically underpaid and the current payments (10k pa)are perhaps not even covering the interest on the £178k balance let alone a repayment plan, hence the amount owed increasing . Can she make an appointment with the lender to go in and discuss ? Does stbx still have any legal interest in the property ? Are there other add-ons like insurance in the monthly payments?

thank you both. i have suggested she might find MN useful a few times in the past but she hasn't yet visited. it's up to her. i will direct her to MSE aswell.

LIZS what do you mean by legal interest in the property?

Is his name on the title at Land Registry and /or mrotgage ? Could make it more difficult for her to sell.

Bloody hell she needs to divorce him. This will all come out in the financial settlement. He can't stop her divorcing him. Most solicitors will give her a free first consultation and they will tell her this.

his name is on the mortgage. he refused to take it off or divorce her until a few months ago when he applied for divorce as he was getting engaged. friend agreed to the divorce so that is going ahead now.

Can I suggest that she talks to CAB? When you say "the house wont get anywhere near what she owes on it" do you mean it's in a state of negative equity? If so, and she sells up, then she's still liable for the remainder of the debt.

There may be other ways to tackle the problem, up to and including bankruptcy, which could leave her more financially stable at the end. CAB (or CCCS or National Debtline) offer a free debt counselling service and may be able to present more options than her lender who will be very single-minded about getting as much of their money back as possible.

yes it's in negative equity. she knows she will still owe the difference once it's sold but she knows she'll never manage to meet the payments and get back on track and doesn't want the threat of repossesion hanging over her all the time. she cant cope with the stress of it. we hadn't considered CAB i will speak with her later and suggest she makes an appointment with them perhaps before speaking with the mortgage lender. thank you very much. this is a great help.

Yes she really needs to talk to someone. How could he be made bankrupt with his name on the house and it not being involved?

That's an excellent question. His name is not only on the house but they are also not divorced... which rather makes the property part his as a marital asset. Is she sure he's actually bankrupt or is this just something he's told your friend in order to wriggle out of handing over any cash? Does your friend have a solicitor?

the bankruptcy was in the local paper, but yes i hadn't even thought of how it didn't affect her and the house! maybe because he hadn't made any payment towards the house in years? i spoke with her last night and she's going to make and appointment with CAB before anything else. she did have a solicitor when she was going through the repossesion hearing.

She certainly needs some advice. If he forced her into the remortgage just before he left then possibly she might be able to avoid liability for the larger remortgaged amount particularly given the nature of his relationship over her.

If that is so then she may only be liable for interest on the original mortgage sum not the larger sum.

That alone might be enough to get her straight as the bank may have to write off the remortgage amount or pursue it against her husband, redo the mortgage for the lower sum and then paying off the arrears of interest may become possible. Also she may be able to remortgage to a better lower interest deal, take out a 40 year old and ideally perhaps take on a second job as if she had a bit more money then she may be able to keep the house and then as the chidlren get bigger she can earn more and move to a repayment mortgage.

I don't think she shoudl rush to hand in the keys and be made bankrupt and homeless with the children. Also if the ex has a job since his bankruptcy he could be required to pay on going payments. Her lawyer can make an applicatino for interim/emergency payments from him IF he has a job/any money.

She needs to have it made very very clear to her never to throw away statements unread, always know all the details of all finances, know the interest, keep accounts, read bank statements and spend a lot of time on that side of things going forwards wherever she lives in due course.

thanks Xenia. i didn't know that about the remortgage possibly not being her liability. her STBEXH is self employed and says he isn't earning.

she is also looking for another job. she is part time at the minute.

If the house is in negative equity then bankruptcy makes no difference to anything. Really she needs to sit down with the banks mortgage advisor & discuss options.