To not pay mortgage

[Liondoesntsleepatnight]

Due to a number of unexpected issues we’ve accumulated credit card debts, we did 0% transfers, paid a wedge off (not just minimum payment ) but want a mortgage holiday to clear the rest.

spoke to lender, they are suggesting interest only but it’s still £1300 a month, however - in the past two years we’ve over paid (my work bonuses) to the tune of £25k. We’ve been told that if we stop paying we won’t be in arrears, until credit runs out, is that right?

I just want 6 months off, then over pay to get back to where we were.

We were able to do this on our mortgage, it all depends on your mortgage agreement. Definitely get it in writing.

OP said "we" about a billion times.
I'm guessing they are not alone

Downsize. You’ve over reached. You’re rearranging deckchairs on the titanic at this stage.

The mortgage charter allows you take 6 months interest only without affecting credit score. But you specifically have say you want to take it under the mortgage charter for some reason. I’m not sure whether all banks are signed up to this but the big ones should be. We had to do this a few years ago when we were in a financial situation and it really helped us out. Payments increased very slightly after the 6 months was up but nothing we couldn’t manage by then. It’s definitely worth considering for some breathing space.

You need to check your documents as to how the overpayment is treated, has it already been applied to reduce capital owed or is it held separately.

That doesn't sound right to me. What kind of mortgage do you have is it a flexible one, if so then yes they may not be a minimum payment requirement. However if its just a a normal fixed
, variable etc then unless they put a payment holiday in then they would bill you every month and it you don't pay then it will be arrears. Surely the mortgage company are giving you the correct info !!

To answer a few points, we are cash flow poor due to unexpected expenses but high earners, not young so wanted to over pay when I had surplus money to shorten term. It’s a standard repayment mortgage. If we can clear these debts we will have surplus to again over pay.

I had heard of mortgage holidays, friends took them on maternity leave etc so I spoke to the lender (Halifax) they surprised me by saying that the account is in credit, as per PP I thought that the overpayment went against the loan. The guy suggested it’s as simple as just not paying but referred me to another team, that other team were disinterest (sounded almost disappointed) because we are not in arrears or in financial trouble. They also suggested the interest only option.

I will call again tomorrow, ideally I want an agreement for a six month holiday, that won’t affect my credit rating.

I don’t need to downsize, we earn well, also moving costs and stamp duty would need to be found. The only people benefiting from our situation are the banks.

we can’t find a decent 0% balance transfer deal at the moment.

When you call again tomorrow, you should clarify if the overpayments are bringing your capital down or not. When I overpay on a mortgage, it comes off the capital and always reduces my monthly payment. If this isn't what's happening with yours, then you'd be much wiser to instead of sending the bank overpayments, then investing the money, fill up your ISA's, that's £40K between you annually, have you maxed out on Premium Bonds? That's £100K between you invested. While interest rates are still relatively good, you could be earning money on them if it's not saving you mortgage interest by overpaying. So definitely get that clarified.

Once you've enough saved to pay off the mortgage, then you could take it all out to pay if off in one hit.

If your current mortgage isn't bringing the capital down with every overpayment, that sounds really shit.

I went through a tough time a few years ago, I'd overpaid my mortgage so the bank were fine until I reached the end of the overpayment, by which time things were sorted, so all was ok. I did of course let the bank know.

My lender lets you do this, anything overpaid can be used as payment towards future installments. I have done this and its fine. Double check with rhe lender though.

This is why rushing to overpay a mortgage is often a bad idea because you lose flexibility that you might need later.

In most cases you can beat or at least match or nearly match the interest rate with savings so there's no financial benefit to overpaying anyway.

As you have found out, mortgage lenders aren't always co-operative if you need to use the flexibility by taking the amount previously overpaid into account.

You can try asking them again but you need to get the points about using the credit built up and this not affecting your credit rating in writing.

Also you say you 'can't find a 0% deal' but have you applied for any? There's always loads available so unless you've both applied for two and been rejected, I would keep exploring that avenue too. If you are still rejected, pay as much as you can off the CCs and apply in 6 months time if still in debt.

But if you're in that position it sounds like you're looking overstretched to lenders so it's probably the time to review your finances, cut some costs (reduce bills and groceries, cancel unused subscriptions, minimal non essential purchases including little or no coffees, lunches and eating out etc) to build up some slack in your budget.

You say you earn well so your finances shouldn't be derailed by 'unexpected expenses' you should be able to cover these with savings and good budgeting, ie saving monthly for annual and irregular costs like car repairs, white goods replacement etc.

You clearly DO need to downsize as you cannot afford your mortgage. Some people just cannot understand that a high salary doesn’t mean you can afford high mortgages!
Do yourself a favour - ditch to too expensive house and start living within your means.

Yep silly person over paying on a mortgage never knowing when you’ll need that money later on in life

Surely it makes sense to put debts on 0% -then work out a sensible plan to pay off rather than mess about with your mortgage?

Can you clarify the unplanned expenses?
Is job loss involved
It seems odd that you are high earners, paid 25K off mortgage but no savings?

You can take a payment holiday but you'll still be accruing interest on the amount you owe. I'd try and pay something each month to at least be paying towards the interest. I'm horrified that interest only is over £1000 a month!