Can you defer payments on mortgage?

[witchymand]

Hi just a quick question, my friend is in her 16th year of her mortgage so only has 4 years left on it. However she is in a bit of a financial situation at the moment as her job have cut her hours to part time, so it is currently being taken up in a dispute. She is finding her mortgage payments the hardest to cope with. Is there any way she can stop paying the mortgage for the next few months, will interest be added as she is only paying the principal now?
Thanks

 

[ClubMan]

If she is finding it hard to meet the repayments then she should contact her lender as a matter of urgency to discuss the possible options open to her (e.g. taking a repayment holiday, switching to interest only etc.). With 16 years of a 20 year mortgage gone I presume that her outstanding capital amount is pretty low compared to the original amount borrowed and as a customer of good standing I would expect the lender to be understanding. Switching to interest only for a while might be a good option. Stopping repayments altogether will capitalise interest that accrues in the meantime. At least with interest only the oustanding capital amount stays as it is until she can get back to making normal (capital and interest) repayments. If the mortgage term needs to be extended then she may need additional or alternative mortgage protection life assurance. Under no circumstances should she unilaterally stop or vary the repayments without first discussing matters with the lender. Any chance she might qualify for [broken link removed]? If necessary could she trade down?

 

[ajapale]

Your friend could contact MABS.
MABS is a national free, confidential and independent service for people in debt or in danger of getting into debt.

Your money difficulties can have arisen for various reasons
The most common reasons in our experience are:

• Changes in life’s circumstance
• Illness
• Unemployment
• Relationship breakdown
• A drop in income
• Increased expenditure
• Just not enough to go around

There are more people than you think experiencing problems with money.
Our experience is that money difficulties can affect everyone from high income earners to people on low income.
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[robd]

Hi just a quick question, my friend is in her 16th year of her mortgage so only has 4 years left on it. However she is in a bit of a financial situation at the moment as her job have cut her hours to part time, so it is currently being taken up in a dispute. She is finding her mortgage payments the hardest to cope with. Is there any way she can stop paying the mortgage for the next few months, will interest be added as she is only paying the principal now?
Thanks

Generally most mortgage providers will faciliate this. She must contact them ASAP and discuss with them otherwise she could miss payments and get a black mark on her credit record. They may prefer that she goes interest only rather than stop paying all together. Interest will be added on if she is paying nothing for a while. A small percentage of her mortgage repayments relate to interest at the moment rather than "she is only paying the principal now". Mortgages don't work that way (although it is a common concept that they do).

This clashed with Clubman who got there first and said the same thing.

 

[bobk]

The other option she should think about is to extend the term of the mortgage.
People can generally have upto the age of 65 (70 with some banks)

For instance...
50k over 4 years at 4.75% is 1,145 per month
Over 10 years it's 524 per month

She can change back when everything is sorted out. This way, at least part of the capital is still being paid off.

Beyond that though, only a couple of bank will offer a payment break (or moratorium)
Talk to the relevant lender and see what they can offer

 

[ClubMan]

Extending the term of the mortgage or otherwise rescheduling the repayment of the capital will most likely mean that her mortgage protection life assurance will need a review especially if it is bog standard decreasing term cover but even if it is level/convertible term.

Mortgage Protection and Mortgage Repayment Protection Policies

On the other hand she could always shop around and find better value out there now. Don't expect the best deal on this cover from the lender. Are there other areas in which she could reasonably make savings in order to redirect money towards the mortgage?