Cant pay wont pay

Required Reading


  


Cant pay wont pay


Assuming you're not using your house in this way, but are genuinely in difficulties, you should, long before it gets to this stage, consider `trading down' as an alternative, if your financial problems look as if they're likely to persist.

With estate agents' and legal fees, it's an expensive business and you may not come out of the deal with as much as you had hoped; but it's better than having the building society conduct a forced sale where they will be primarily interested only in getting enough money to cover the loan, not in getting the best deal possible. In any case, the society will charge their legal and other costs on the sale to you.

3 You have to give up work because of ill health.

The same considerations apply here as when you are made redundant. You might of course be lucky enough to work for an employer who provides an effective sick-pay scheme, in which case your problems on the mortgage front should not be insurmountable. However, you may still find it necessary to request an interest-only mortgage for a time if the level of sick pay is considerably less than your normal salary.

There are certain schemes available through which you can insure against the possibility of your being made redundant or having to stop work through ill health during the term of your mortgage. The National Association of Estate Agents operate a Redundancy Insurance Scheme which is available only to those who are buying a property through a member of the Association. You can insure against redundancy for the first two years of your mortgage for a flat premium of £139. If you are made redundant during those two years, the scheme will pay the mortgage instalments due for the remainder of that period.

At the time of writing, several building societies including the Leeds and Abbey National are actively considering offering an insurance package which would cover both redundancy and prolonged ill health. The National & Provincial already run a scheme which covers both redundancy and ill health and the Derbyshire Society have a scheme which covers redundancy.

These schemes appear to be growing in number and so if you are interested in them it would be worth asking the manager of your building society if they operate such schemes at the time you go along to see about your mortgage.

In addition, two insurance companies offer redundancy protection schemes which anyone can take out, no matter which society they are borrowing from. Cornhill have a 'Protected Mortgage Plan', where premiums for covering a mortgage payment of £1150 a month work out at £17.50 a month; Premium Life's Redundancy Protection Scheme covers only the life assurance premium part of an endowment mortgage.

One point to note with all these schemes is that cover against redundancy cannot (by definition) be available to anyone who is self-employed.


The mortgage interest rate goes up, and you're having difficulty meeting the increased level of mortgage payments.


If you've a repayment mortgage, you can apply to the building society to extend the term of the mortgage, which should help a bit. If you've an endowment mortgage, however, no such course is open to you.

2 You've been made redundant.

If this no longer rare should happen to you, tell your building society manager about it at once. You win no brownie points by keeping a stiff upper lip and maintaining silence quite the reverse, in fact. It's worth telling him even if you anticipate no great difficulty in getting another job and don't expect to fall behind with your mortgage payments. Should things take a turn for the worse, it will stand you in good stead; and, if they are quickly resolved . . .... see: The mortgage interest rate goes up, and you're having difficulty meeting the increased level of mortgage payments.


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