paying interest only on mortgage

hi guys, my husband has been put on 3 day wk and 20% paycut also.. so wages is in effect is halved now, signing on since 1st feb but no luck yet getting dole with backlog so thinking of paying the interest only on our mortgage for the next year to tide us over, with ulster bank tracker (which has come down but still cannot afford to live/pay bills etc as i am working part-time). Does anyone know is this easy to do? or long drawn out process?as im at my wits end trying to sort everything out at moment. All advice gratefully received. Many thanks.

Sorry to hear about your troubles Sue.
It shouldn't be a hard process to change to interest only. I'd imagine the best course of action for yourselves would be...
Ring your bank.
Explain the situation.
You haven't mentioned that you've considered this part but, tell them that you want to extend the term of your mortgage to the maximum allowed given your age, and tell them that you want to go interest only.
They should send you out the forms to get everything "official".
You'll then have to get your life assurance renewed to take into account the new term of the mortgage.
Get a copy of the new life assurance policy, and send it back to them with the forms they gave you.
Everything should be changed, and hopefully you get back above the breadline.

The only problem with the above is that you might have to forfeit your tracker.
But a tracker's not gonna be much good to you if you lose your house, God forbid.

I recently went interest only on my mortgage for a 2-year period to give me a chance to clear some unsecured debts.

I wrote a letter to AIB outlining why
They replied saying okay but asking me to write to confirm I wanted to go ahead, which i did.

They didn't need me to get new mortgage protection as there is enough in the policy to cover mortgage and has not reduced as fast as I paid off the mortgage.

As soarer says, if you are on a good tracker you might be giving up a great deal if you go interest only. You may end up paying about the same anyway depending on what it is as variable rates are around 1.5-2% above the types of tracker rates they were giving out at the peak of the market.

If possible, I'd avoid it but I guess if you have no choice, then there is not much else you can do

thanks guys.. im trying to hold off as long as possible but the way things are the kids will be paying for the house! The tracker is good and going down again from next month so hopefully if i leave it for another month and see what happens and if dole comes throught that maybe cover us for a while, just dont want to change terms etc of mortgage if at all possible.. i might go into them and just say I am thinking of it and see what options they give me. thanks again

Sorry for your troubles. You would need to find out if the bank will insist on you changing your mortgage protection policy to a term policy in order to allow you to go interest only (The reason they may look for this is that an MP policy reduces but a term policy stays the same). If they do a term policy will cost more and so could negate the saving you have made on going IO - best of luck.


www.powerinsurances.ie

would they do that if you were only looking to go interest only say for a year?
thanks

It doesn't seem to be an exact science with the lenders. Sometimes they will look for this to be done before they will change the mortgage, sometimes they won't look for it to be done at all. Like the other posters said, I would be slow to change from a tracker. I'm sure the bank will fall over themselves to get you off the tracker but that will be for their benefit. Is there any where else you can save money instead, Have you shopped around for your life, house, car, health insurance? Have you set down and seen exactly where your money is going every month? This might be a better long term solution than 12 months I/O mortgage.


www.powerinsurances.ie

im paying mortgage with my wage (part-time) now husband is only coming out with 200e per wk to cover food etc for ourselves, and 2 pets!. hes in car industry (dead) so no joy there trying to make extra monies. the few bob if left from my wages im using to pay life insurance,esb etcetc but really struggling when wages cut more than half!! life ins etc i changed last year as got better quotes..living off parents at moment.. terrible to end up like this at this stage of our lives

Jimbobp said:

Like the other posters said, I would be slow to change from a tracker. I'm sure the bank will fall over themselves to get you off the tracker but that will be for their benefit.

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Forgot to mention, I went interest only & stayed on tracker rate.......bank let me do that - there was actually no mention of me losing it - I wasn't stitching rates, just going i/o. This was in last 2 weeks with AIB.

Don't want to come across as glib, but think it was Henry Ford that said 'If you think you can fail & you think you can succeed, your right on both fronts.' I know its easy for me to say, but try on focus on the problem without panicking & stay positive. Prioritise your bills, paying the ones that are secured on your home first. Try think outside the box a little if possible. Could your husband offer his services to people who want to buy in the UK? Maybe helping them buy over there and checking out the vehicle for a fee? Could he retrain as a loss assessor maybe, is he a mechanic, could he offer servicing? Most important thing is that your trying to do something about your situation and you should be commended - a lot of people are still burying their heads in the sand.


www.powerinsurances.ie

Have you thought of other options to save money?
- get rid of the pets
- you go full time rather than part time
- rent out a room or two in house

sorry cant get rid of our dog or cat - my girls would lose their lives!! they are members of our family too!!.. i might look at the loss assessor aspect which sounds good..many thanks and maybe taking in student etc..