Mortgage and having a savings pot as a back up

[Bubblebu]

Hi

I have mortgage but am currently on sick leave (assuming my job is still there returning to work October 2020).

Although I can pay the mortgage at the moment and have a (very small amount of savings - eg about £2-3K) I have been thinking about what sensible steps and in what order I should take one or more of the following actions to ensure I have emergency funds or at least a plan of some sort if things get desperate.

I am a single mum of 2 primary children - ex pays me the minimum HMRC child maintenance but no spousal.

Mortgage is just less than £1500 pcm which is slightly more than the required monthly payment to the lender.

Which of these steps would you take first:

• contact mortgage lender and go back to minimum payment
• ask for a payment holiday of 3 months (credit rating?)
• ask to extend the mortgage duration (re mortgage)
• fess up to mortgage lender i cannot afford and ask for interest only payment for a while
• (desperate but possible) fill in application to withdraw up to £18K from a pension pot I have

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I have applied for universal credit which i am getting (not much) and have been told in principle that i also qualify for ESA payment (but not how much - dont think it will cover all my mortgage)

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So this is a precautionary action plan and I am just wondering which of the above I should do first to (hopefully) avoid having to sell the home and downsize - and i am seeing it as a "if i lose my job" / "if i can only work such reduced hours as I can only just (or not) afford the mortgage for a while.

thanks for any thoughts oh wise ones.

Firstly if you are talking about qualifying for new style ESA payment you need to be aware that Esa would be deducted pound for pound from your UC anyway so you will not be any better off by claiming them both unless the new style ESA is going to be more than your Uc. Your Uc will go up if you are awarded LCWRA after assessment.
personally I would stop overpaying immediately and see how you go. have you any idea how long you may be off sick for?

Also do you have any critical illness insurance that would cover the mortgage payments in the event of you not being able to pay?

Thanks Babyr/

No I don't have any critical illness cover - was going to get some but then my cancer diagnosis came along first.

Don't know how long I will be off - technically I have finished my treatment for breast cancer - but now they want me back in for another MRI and CT scan to check for possible brain cancer. The fun never ends......

What does LCWRA stand for? do i have to apply for that or do they interview me and then let me know after that?

@Bubblebu firstly sorry to hear about your diagnosis.

A mortgage holiday should be pretty straight forward at the moment. I had one earlier in the year when my income stopped over lockdown. My monthly payment has gone up a bit now I'm paying again as I still incurred interest over these months but it's only about an extra £5. My mortgage payment is only a fifth of yours though! It shouldn't effect your credit rating at all.

Have you spoken to Macmillan? My mum spoke to them re finances when she was doing her treatment for breast cancer. There might be something you're entitled to that you don't know about.

I think I'd probably look into interest only for a while but I think that depends on your current mortgage deal, I wanted to remortgage this year but it would cost me £3k in fees because I'm on a 5 year fixed atm 🙄

thanks passthe...

Yes I have spoken to Macmillian and they were very helpful - perhaps I need to talk to them again.

I have moments when i feel quite terrified. Apart from how grueling chemo surgery and radiotherapy were - they have now put me on this tablet called letrozole (to suppress oestrogen) and I am finding it quite savage - on off non stop nausea, sometimes vomiting and what feels like constant hot flashes. On bad days I seriously wonder how i will cope with concentration on return to work.

I am discussing this with my oncologist but i really hoped i would be starting to feel better by now.

Im interested in what you say about credit rating not being affected - ive heard conflicting anecdotes about that - some people say it will be some say it wont. A bit catch 22 because i want to know for certain before i take the plunge and fess up to my mortgage adviser. But then again maybe i wont have any choice in the end anyway.

@Bubblebu

Thanks Babyr/

No I don't have any critical illness cover - was going to get some but then my cancer diagnosis came along first.

Don't know how long I will be off - technically I have finished my treatment for breast cancer - but now they want me back in for another MRI and CT scan to check for possible brain cancer. The fun never ends......

What does LCWRA stand for? do i have to apply for that or do they interview me and then let me know after that?

If you have made a claim for Uc and are handing in sick notes then after a few months of handing in sick notes they will send you a Uc50 form to complete. You may have already had this. If going through cancer treatment or recovering from it you should be awarded LCWRA ( Limited capability for work and work related activity ). Do you already have this element on your statement ? Also you could look at claiming PIP depending how your illness is affecting your daily living and mobility. You say you have spoken to macmillan , I presume regarding benefits, but you may not be aware that they also have a team of financial guides who can help guide you on the best way to speak to your mortgage provider and the best way to proceed. They really are a great team of experts. Call 0808 808 00 00 and ask for Financial Guidance team. They also have a work support team who can help guide you if you have any issues with how to talk to your employer / reasonable adjustments etc.

Thanks Baby this is really helpful i am grateful to you.

Yes I have received and filled out and returned UC50 and received a journal entry acknowledging receipt but no information yet on what (if any) extra money I might receive/

At the moment they are saying i dont need to go in to prove i am available for work although (so far) the main reason for not returning for the meantime is my cancer firstly (then maybe later the corona virus).

I will call Macmillian again to clarify things - they have sent me various leaflets,I probably just need to refresh my memory on what they said.

The team who advise on universal credit seem to be slightly different from the team who advise on mortgages etc

The mortgage holiday, if properly agreed with your provider shouldn't affect your credit rating at all. It would only be a problem if you just stopped paying. If the mortgage company isn't trying to collect a payment there should be no default.

Sorry that you're feeling so rubbish with all the drugs. Fingers crossed your oncologist can help. You're doing amazing with all this and trying to cope financially.

thank you passthe

that is really kind.

cancer is a real b**ch would not wish it on anyone in the world

@Bubblebu

Thanks Baby this is really helpful i am grateful to you.

Yes I have received and filled out and returned UC50 and received a journal entry acknowledging receipt but no information yet on what (if any) extra money I might receive/

At the moment they are saying i dont need to go in to prove i am available for work although (so far) the main reason for not returning for the meantime is my cancer firstly (then maybe later the corona virus).

I will call Macmillian again to clarify things - they have sent me various leaflets,I probably just need to refresh my memory on what they said.

The team who advise on universal credit seem to be slightly different from the team who advise on mortgages etc

Yes the Macmillan welfare rights team will advise on UC/ PIP etc, the Financial guidance team will advise on mortgages but if you need to speak to both teams, just ask if they can transfer you across. The LCWRA element that you should be awarded is an extra £341 a month. I would ask on your Uc journal how long a decision should take. If you are within 3 months of having chemotherapy or radiotherapy it should be pretty much automatically awarded so do chase it up. Once awarded , that element should be paid from the fourth Uc assessment period after you started handing in sick notes, so if that point has passed you should get back pay also. I would chase it up. They will send you a decision/ award letter on your Uc journal once it has been awarded.