A mortgage situation that has to change

A reader got in touch after he was contacted by his mortgage lender, the EBS, with the grim news that as his fixed-rate term has finished, his mortgage is being switched to a standard variable rate which would increase his repayments.

“Is there any way that I could take “time-out” from paying my mortgage? I’m already struggling to pay the mortgage as it is and every penny at the moment is being put into running the house,” he writes. “I’m married with two kids and there’s another on the way so there’s only one wage coming into the house plus the children’s allowance/welfare etc that my wife receives.

“I’ve heard of paying ‘interest only’ but I’m not sure what this is and I’ve also heard of extending the period of the original mortgage , but I’m not sure about what happens there either. I doubt that the EBS will allow any breathing space, but if I could even get six months breathing space it would be a great help.”

The first thing we would remind this reader is that he is not alone and there are tens of thousands of people in the same situation. More than 50,000 mortgages are in arrears for more than three months, with many more people just about scraping the money together on a monthly basis to service their loans. More than 120,000 households have signed up to arrears repayment plans with the major utilities – a clear indication that they are not able to get by.

We would advise him to write down all expenditure and income and work out how much is needed to clothe, heat and feed his family. When he has his meeting with his lender, chances are they will get him to do this anyway. He can only pay his debts with what is left.

He also needs to realise that we are living in changed times and the notion that the EBS will refuse to accommodate his changed circumstances is wrong. They may be reluctant but this reader, like all people in his position, needs to stop being scared of the banks. There are options out there and the EBS will have to put them on the table. He can, for instance, apply for a mortgage holiday – take six months or a year off from making payments so he can work towards getting himself onto a more sound financial footing without the stress of trying to get the money together each month.

A better alternative is to ask (or insist) on switching to an interest-only mortgage for a period of between one and three years, or extending the mortgage from 20 to 30 years. These steps ultimately increase the costs, but only in the long term. We have asked this reader to keep in touch and to let us know how the EBS treat him. If they do not present him with the options they are obligated to present him with or if they attempt to bully and harass him into paying the full standard variable rate even though he cannot afford it, we will highlight that fact.

Credit where it is due

Eoin McDermott reminded us that people are quick enough to criticise poor service “so I thought it only fair to drop an e-mail to recognise the quality of service I got at EuroCycles on South William Street in Dublin last week.” He was on his way home from work when his bicycle chain snagged and came off.

“I did my best to repair it on the side of the street but was unable to. I pushed the bike as far as the South William Street shop where it was promptly fixed while I was allowed into the staff room to wash my oil-covered hands. The bike was returned with a smile and the staff wouldn’t hear of payment, preferring to chalk it up as their good deed for the day,” he writes.

He contacted the shop and asked management to pass on his thanks to those in the shop which, he says, he has used in the past and will again. We reckon the staff’s good deed deserves a big thumbs up from us.

Clean your plate

William Fleming from Bangor, Co Down, contacted us in connection with last week’s piece on food waste. “I was always told in my formative years that it is very bad manners to clear one’s plate completely,” he writes “Accordingly, I always leave something, irrespective of how dearly I want to finish it.”

He says that it was explained to him that “to clear one’s plate is tantamount to telling one’s hostess she failed to serve a large enough portion, and therefore was a very poor hostess indeed. Even in hotels/restaurants I follow that rule to this day, without any complaints, and as I am now in my 90th year I don’t think I am going to change!” Fair enough.