Thanks David, I probably do need to sit down with someone. Just a couple of questions though, how quick could this be arranged? Is my understanding correct re creditors expectations re staying on interest only and them benefiting from this by way of the payments that would otherwise go towards the mortgage capital?

Did NRAM say that you wouldn't be allowed to switch to repayment, or are you just assuming that, CIF? I'm not sure that it will necessarily be the case, so maybe it is worth giving it a chance and holding off from entering a Trust Deed until after your meeting with them? Is a couple of months going to cause major problems for you?

They have said each application is assessed on it's own merits. I have a bad feeling they will want me in a TD or other arrangement before they would consider the switch. But equally going into a TD while still on interest only would scupper my chances of repayment. Mental.

Anyone able to answer re the interest only element and creditors approach to it?

Hi CIF,

Creditors very commonly accept trust deeds and debt arrangement schemes where the individual starting one has a repayment mortgage.

Hi CIF,

Please accept my apologies for the delay in responding, I was on annual leave there and missed this.

The Trust Deed payment is based on affordability and whatever your surplus income is that is what is meant to be paid over into the Trust Deed.

Like Kevin has advised it could be better to wait until you have met with an advisor from NRAM before actually signing paperwork to proceed with a plan.

In the meantime you could meet with a debt expert (if you haven’t already do so) to look at your financial situation and that way you have a good understanding of how things will work and once we know the NRAM outcome you can decide what to do.

Just off the phone to NRAM. They won't consider the switch to repayment due to my outgoings.

So situation I am in, my creditors will not consider me making overpayments to the mortgage as it's not contractual? In other words, my mortgage capital will go unserviced for the period of the TD. I would appreciate if someone could give a definitive response on this. It was the situation last time and I just want to ascertain if anything has changed since 2009.

I can't give you a definitive response CIF. That would need to come from any firm that's handling a case for you.

I can see that a firm might consider it to be a challenge to allow someone to make voluntary overpayments that eventually result in more debt being written off than otherwise would be the case. That would be the case with a trust deed.

It would be interesting to hear from the experts about whether there might be more flexibility with DAS. I'm not sure that there will be, but with a completed DAS those overpayments wouldn't be at the expense of the creditors. They would need to wait longer to be repaid what's owed though.

There would certainly be more flexibility with DAS. You can offer whatever you like in a DAS payment programme these days, so could leave room in your budget to overpay your mortgage if you wished.

There's a chance that creditors may object to the DAS proposals due to this, but as long as the debts are being repaid within a reasonable period then there is usually a good chance that it would become approved.

Lots of ifs and buts in this scenario, but worth mentioning I think....If you are able to get a DAS DPP approved whilst leaving sufficient room in your budget to pay more to your mortgage, then there is nothing to stop you going back to your mortgage lender then and seeing if they will switch you to a formal repayment mortgage instead. As your debt repayments will have reduced, you might meet the affordability criteria after all. If that is successful then you could potentially go for a Trust Deed at that point.

Hope that makes sense!

Thanks TDA and Kevin.

Looks like a very good Kevin. I think I might be able to limp on a bit and get the debt down though. Around half of the debt is tied up in loans and is getting serviced at least. The cards are obviously not.

Is it common for folk to switch from a DAS to a Trust Deed without any problems?

Hi CIF,

Reading back you said that to increase to a repayment mortgage would be in the region of £675ish per month. How much is your current mortgage payment at the moment?

I know in some mortgages you can make voluntary overpayments per month/year as long as it’s not over a certain amount. Me for example I’m allowed to pay extra into my mortgage as long as it’ doesn’t come to more than 10% of my total mortgage outstanding. The issue could be the compulsory/voluntary part as we have discussed.

Kevin makes a good point about the DAS and the possibly of switching over to the Trust Deed if the mortgage company have formally converted your mortgage to repayment whilst you are in the DAS. It is common for people to switch from a DAS to a Trust Deed and it’s normally down to a change in circumstances.

Based on your debts of approx. £43,000 and if you entered into a DAS using a non-fee charging organisation if you paid £400 per month the timescale for repayment would be around 9 years.

It’s hard to give you a definitive response on the forum without having went over a thorough budget with you to see how this looks. For example we could look at your budget and £400 might be more than affordable per month or it might be a stretch for you therefore a DAS could run longer than 9 years. On that basis do you consider a Trust Deed on your current mortgage deal and then after 4-5 years and completion of the Trust Deed pay as much to your mortgage as possible.

If you were to look at a Trust Deed we would need to establish exactly how much equity you have and then how this would be paid over. Again how much would this be and how long would this make a Trust Deed.

I know I’ve said it before but probably at this stage it’s now time for some one to one advice from an expert to really firm out the finer details. Once you do that whatever firm or expert you use should be able to give you a definitive answer.

Thanks David and understood re needing to sit down with an advisor to get more specific advice.

My mortgage interest only payment is 327 per month. I can make as many overpayments as I like without penalty as NRAM are in run off and closed to new business. They therefore want the book run off ASAP and are liberal on overpayments.

If I go into a TD now with no capital payment being made for 4 years, then I would have 9 years to pay off 77k. At current variable rate that would be 900 per month or so. Not attractive. I therefore need an arrangement that let's me make overpayments.

Hi CIF,

Face to face does help but It doesn’t necessarily need to be a sit down with someone, a lot of the initial discussions can be done over the phone and then a meeting arranged at a later date if that’s easier. Very quickly in the space of a 20-30 min phone call we can go over a lot of things and start really working towards a solution.

Apologies to resurrect an old thread here but....

I am still no further forward. However there was a bit of a development not long after my last post in August 2019. Whilst figuring out what to do, a new job opportunity came my way. The company I worked for got taken over and the job came up that way. For the sake of my mental health (which my old job was not good for), I went for it and got it. The downside is that I need to declare if I enter into any debt arrangement. The group policy states that it's more about assessing risk to the business, so I *think* that shouldn't present a problem.

I have ran the numbers on my debt tonight and it's worse than I first thought in that 's not far off £60k bar a few hundred quid. I have continued to overpay my mortgage by £400 per month (contractual payment is £275 thanks to my overpayments) and the total mortgage payment is therefore currently £675.

On looking at a DAS and paying £500 per month towards the debt, that would take me 10 years to get out of, if I continued to pay off my mortgage at current rate. 10 years is a long time to be paying it though and doesn't sound attractive.

However going into a Trust deed worries me, as it would leave me 7.5 years to pay off £72,000 as that means my overpayments would stop during the duration of the TD. There is also the question of equity meaning the TD may last longer. T bought at the height of the market in 2007 for £86,500. Due to the current market and state of the flat, I don't think it would fetch that. I would therefore say that there is £14,5000 maximum worth of equity. I'm aware from the articles on the site that some TD Managers have different policies on equity thresholds. So I have two questions currently;

1. May be flawed calculations but I am expecting a TD payment to be around £900-£1,000 per month out of a £2,000 net salary. That seems very high to me but in the experts view, is that what I am realistically facing? (I have no dependents or other assets such as a car).
2. Are any of the experts able to say if equity of £14,500 will mean an extension of the standard 4 years? If that is the case, then I would then have only 6.5 years to clear £72.000 which seems a hopeless case.

Apologies for the length of the post and thanks in advance for any help you can give.

Hi CIF,

Please don't apologise for resurrecting your thread. This is exactly what the forum is for and I hope we can help you to find a way forwards that you feel comfortable with.

It's not entirely unusual for an employer to want to know about employee financial concerns (espcially in financial services and the professions etc). It's a common risk-control measure because the potential for things to go wrong (from the employer's perspective) is far lower once everything is out in the open.

It's difficult to offer a comment on how much you might be asked to pay each month in a trust deed. We (or any other adviser) would really need to run through your spending needs and expectations directly with you to have a good idea of what a reasonable trust deed payment would be. The whole point of this exercise however is to make sure you have enough income left to cover your bills and other reasonable expenses, with only the excess figure above that being paid into a debt solution.

With £14,500 of equity an extension to the usual minimum trust deed term might be necessary. However, the actual valuation used by a trustee might vary to yours, and some theoretical selling costs might be taken into account when calculating the equity. Accordingly it's probably going to be hard for you to assess the extent to which this might pose a problem in reality without taking direct advice.

Sorry that I couldn't answer your questions more specifically or directly, but I hope this information is useful to you.