Tracker mortgage to interest-only

The Minstrel

I have a tracker mortgage but recently lost my job and can no longer meet the payments. I'm hoping to move to an interest-only option before the next payment.

My questions are:
1. If I get back on my feet after the initial 6 month period, will I be allowed to resume the same tracker rate?
2. Worst case scenario: what if I can't find work and am forced to emigrate to Australia? How long could the interest-only option be extended? I understand that each case is different, so just looking for anecdotal evidence.
3. As I can no longer afford to live in my apartment, I may have to move back with my parents (which would limit my employment options given its rural location) and rent out the whole apartment (it's a 2 bed). My understanding of my mortgage agreement is that the rate is somehow connected to my living there and renting out only 1 room. This also has tax implications for me on mortgage interest relief with the rent-a-room scheme. I'm concerned that forgoing this would result in the debt spiralling into an even more unsustainable level than it is.

Just wondering if anyone out there has any knowledge of this kind of scenario.

Thanks

NIMAN

1st thing, contact your lender asap.

Sorry to hear about your change in circumstances.

cookie1977

This site may also help:

http://keepingyourhome.ie/

http://keepingyourhome.ie/mortgage_debt.html.en

Resolution

The lender must explore all options for alternative repayment arrangements. These options must include:

An interest-only arrangement for a specified period
An arrangement to pay interest and part of the normal capital element for a specified period
Deferring payment of all or part of the instalment repayment for a period
Extending the term of the mortgage
Changing the type of the mortgage, except in the case of tracker mortgages
Capitalising the arrears and interest, and
Any voluntary scheme to which the lender has signed up, e.g. Deferred Interest Scheme
The lender must not require you to change from an existing tracker mortgage to another mortgage type as part of any alternative arrangement being offered.

Lenders must not:

Initiate more than 3 unsolicited communications with a borrower, by whatever means, in a calendar month other than correspondence required by the CCMA or other regulatory requirements
Require a borrower to change from an existing tracker mortgage to another mortgage type, as part of an alternative arrangement offered to the borrower in arrears or pre-arrears.

The Minstrel

NIMAN wrote: »

1st thing, contact your lender asap.

Sorry to hear about your change in circumstances.

I already contacted them. I'm waiting on confirmation that I can go to interest only. I was just wondering how it has worked out for people in similar situations.

The Minstrel

what does it mean by "capitalising interest and arrears"?

Lad GAGA

It means that your underpaid interest is added to the existing capital balance e.g. say the outstanding capital balance on your mortgage is 100k when you stop meeting your scheduled repayments and assuming you are not making sufficient repayments to reduce this capital balance, any underpaid interest will be added to this figure. This ultimately means that you will be paying interest on an increasing outstanding balance. So if the monthly interest element of your repayment was say 500 but you could only afford to pay 300 a month, your outstanding capital would be increasing by 200 a month as you are not making sufficient payments to reduce this balance and you are also underpaying the scheduled interest element.

lpjonesy

To get interest only which only lasts for 6 months at a time , you have to submit bankl statements for 3 months and 3 social welfare payslips and fill out an income and expenditure form.
Interest only is for fools dont do it for more than 1 year , I did it but have decided to go back to full payment as I would be paying the mortgage into my 60s .
They wont give interest only if you dont live there , its only for owner occupiers

cookie1977

That's not necessarily true for all institutions. I applied for a 6 month interest only mortgage and only had to fill in a budgetary form for ICS. Nothing else was supplied. I then went and applied for a further 6 months interest only and had to fill in the same form again. The bank initially said "don't think so" but eventually agreed to a reduced capital payment and interest. These measures did not require the supply by me of any wage slips or bank statements. So it depends on the institution and situation. And this was a second property that we did not live in but rented out.