Save or pay up?

[the pops]

Hi all

I have a dilemma with my bank at the moment and I was just wondering what advice people may have. Basically I have been up to date on my mortgage, I am about 8 years in to it though the first 3 years were interest only due to the fact that I had recently set up a business which is now sadly gone. Anyway a couple of things happened which left me in a position of owing about 3 months in arrears. Without going into too much detail the wife had lost her job and my earnings had decreased rapidly since the recession kicked in. We decided to go abroad to look for work and rent out the house. We obviously lost our mortgage interest relief and on top of that the house took a few months to get rented. Now it is thankfully but I am still making up a shortfall on the rent each month.

So I fell behind to the tune of about 4k on the mortgage and initially I asked to go interest only to cover it with the bank but they refused telling me that they would not grant another interest only period. They offered me a reduced payment schedule but it was only for the amount of the rent that I am receiVing so I said this would be of no help to me. They started to get quite aggressive with me insisting that I sign up to this and pay up asap. The problem was that this tiny offering they were giving me was actually going to tack on quite a lot at the end of the mortgage and they still wanted me to make a commitment to pay them the debt in full within 6 months. I stupidly decided to ignore them for a while and just get the head down and pay my mortgage as normal which I have been doing in full for the last 7 months as luckily I have had some work going on. Now I have managed to put away about 4k and this has coincided with some letters stating they are taking legal proceedings against me to get the missed payments.

As much as I would like to settle this I do not want to just give them everything I have worked hard to save this year. Should I offer them 1k and see if they will just put the rest on the end of the mortgage? Will this work and is there a real chance they will take the house over this? Thanks

 

[alexandra123]

If you have 4k in savings and the banks are hassling for money that is owed to them, then I reckon you should pay up. If the 4k is in savings with the same bank they will be less lenient with you as they know you have the money there.
I dont think they will accept the 1k.
To put 4k on the end of the mortgage are you asking to increase the term by 1 year or to put the 4k on the whole of the mortgage whilst keeping the same term ? If keeping the same term, in the long run this is going to be very expensive for you and you would be better off just paying it off. In the future with the rates going up - can you really afford to let this small sum partially effect your ability to repay when the rates increase ?

Is the issue more so the fact that you are annoyed with how they are handling your situation ?

 

[the pops]

If you have 4k in savings and the banks are hassling for money that is owed to them, then I reckon you should pay up. If the 4k is in savings with the same bank they will be less lenient with you as they know you have the money there.
I dont think they will accept the 1k.
To put 4k on the end of the mortgage are you asking to increase the term by 1 year or to put the 4k on the whole of the mortgage whilst keeping the same term ? If keeping the same term, in the long run this is going to be very expensive for you and you would be better off just paying it off. In the future with the rates going up - can you really afford to let this small sum partially effect your ability to repay when the rates increase ?

Is the issue more so the fact that you are annoyed with how they are handling your situation ?

The money is actually in my bank in the new country I am working in so they dont know about it. I was hoping to extend the term by a couple of months, not a whole year but you are right in that it could be potentially more expensive long term, but I just need a bit of liquidity now. In response to being annoyed at how I have been treated, well I have not really told the half of that but to cut a long story short I was abused by a member of staff and insulted. When I complained about this I was basically ignored and told again to pay up, so as you can imagine I am somewhat annoyed at them.

 

[Bronte]

If the 4K that you have is going to solve the issue than you should just pay up. Once they have threatened legal proceedings you are going to end up in a lot more debt as they may start to apply penalties and legal costs. Do everything in writing. And well done on trying to sort things out.

 

[the pops]

Update on this. As recommended I have decided to pay the arrears in full. It will leave me a bit tight but at least I wont get any more hassle from them. Called them yesterday and informed them they would get everything by the end of April. They could not have been nicer to me when they heard that!