Reduced payments or Interest only.Whats Best?

T

timmy

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Have meeting with bank official next week and am wondering what is best for me on the morgtage,interest only payments,or reduced payments for 1 year

Not well up on all the bank stuff so would like to go in with a little knowledge on both payment options

Thanks
 
Interest-only is simply the level of reduced payment that ensures the amount of capital you owe stays level.

If you can reasonably manage it you'd ideally keep your repayments above the interest only level, otherwise you're going backwards i.e. if you couldn't meet the interest only level of payment in the long term you might need something more radical than a 1 year reduction.
 
they offered me a reduced monthly payment,but said i will go into arrears and be black listed with my credit rating?? would this be right,seemed all very rushed and very unprofessional to me,,or is there a better deal out there that i could go after,,
 
Presumably you cannot meet your normal scheduled repayments in full (capital and interest) so are looking for some restructuring to give you some breathing space until you can regain control of your finances and manage your mortgage repayments again...?

Can you post details of your mortgage (date the mortgage started, original amount, term etc.), any accumulated arrears and what the lender has proposed that you can pay and for how long?

It's difficult to comment on your questions without more details. Talk of going into arrears under a restructuring arrangement agreed with the lender makes little sense to me but there's not much info to go on so far.
 
thats whats doesnt make great sense to me,i cant meet the full payments at the moment of 800pm,but could do interest only,but was not offered this,instead they told me it would be reduced payments per month for 1 year.I am currently waiting for them to get back to me with the paperwork and new payment option,so will post what they say.It was a re-mortgage of 80,000 for extention work taken out jan 2007 on a tracker over 15 years,the only arrears i have was missing last months payment because they have nothing set up for me yet,still waiting..
 
Sorry - I'm confused. Using Karl Jeacle's mortgage calculator

http://www.drcalculator.com/mortgage/ie/

€80K over 15 years at (say) 5% is around €600 p.m. all in (i.e. interest plus capital) so I don't know where €800 pm. comes from unless the rate is much higher (c. 9%?)? Is this a mortgage or an unsecured personal loan? If it's a mortgage then I can only assume that it's a sub-prime one with a very high interest rate or something?

Also - if you can afford to meet some of the scheduled repayments (interest only or interest plus some capital but not the full interest and capital) then I don't understand why you have stopped making ANY repayments and are thus presumably going into arrears unless they have already offered you a repayment break until they come to some other arrangement?

Obviously if you cannot meet the full repayments then it makes sense to pay as much as possible - ideally at interest plus some of the capital. Alternatively other options may be feasible such as extending the term so that you can more easily meet the ongoing repayments even if it means paying more in the long run.

Maybe if you post some more details things will be clearer... In the meantime this link might be of interest to you:

http://www.keepingyourhome.ie/
 
This request would have been dealt with under the new MARP requirements. Was this explained to you? Did you fill in a form known as a Standard Financial Statement? The end result of this process is that an agreement will be reached for a level of payments which can be made by you. This will not affect your credit rating provided you keep to the agreement. If you dispute the amount of revised payment required by the Bank/BSoc your entitled to appeal it. However you will need to have a good basis for the appeal. generally in my experience most of the institutions are realistic in agreeing revised payments and would not impose a payment which you clearly can't meet.
 
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