Home truths

30th October 1998 at 00:00
Lynne Wallis meets a single parent who fell foul of informal advice on her mortgage

Karen McGill had thought about becoming a teacher for several years. A university faculty administrator who has done voluntary work in schools and youth clubs, she was encouraged by her 10-year-old son's teacher, who, after watching her with children, assumed she was a teacher already.

Karen says: "I knew it would mean a fall in my income, but I was prepared to make the sacrifice."

So earlier this year, she gave notice in preparation for her PGCE - she already has an MA. She realised her Pounds 345 a month mortgage would have knocked a big hole in her grant money, but was relatively unconcerned because a previous informal inquiry had led her to believe she could take a break from payments.

Two years earlier, she had approached the Halifax, her mortgage lender, and been told the bank would be "understanding". She might not be allowed to take a total mortgage "holiday", but a partial concession for the eight-months' study would be possible, an adviser had said.

But after having her college place confirmed, and making plans to quit her job, she was told the mortgage concession wouldn't be possible after all. Unfortunately she had no written evidence of the advice she had received two years earlier.

Karen now faces a year on the breadline, with two sons and no live-in partner for support, and all on a grant of Pounds 5,168.20 a year. She is eligible for an additional access loan of Pounds 3,145, and child benefit brings in another Pounds 1,373. As a single parent, she could claim income support, but would be unlikely to qualify because her income exceeds what the Benefits Agency says she needs to live on.

Karen, who has never been late with her mortgage, is disillusioned. She says: "I heard so much about the Government's call for more people who felt they had something to offer as teachers. But I don't know how this will be possible with the Halifax."

Half of Karen's mortgage is straight repayment. She bought out the other half from her partner when they split up, and converted it two years ago to a tax-free home plan, on which she pays interest only, with the capital paid off with the proceeds of a personal equity plan. Had she taken out the Halifax's mortgage repayments insurance policy, Karen could have taken a six-month payment break. But she did not realise this at the time.

Halifax spokeswoman Joyce Grummit says: "If a customer stops paying on a tax-free home plan, the savings part doesn't grow. At the end of the day, if you take out a mortgage, the payments must be made every month."

Karen contacted the company's mortgage desk to see if she had any other options, but without success. She is now having to work part-time for her old employers in addition to studying and looking after her children.

Karen McGill is a pseudonym

TAKE A BREAK

Mortgage products that include the option to suspend payments * Abbey National offers three flexible mortgages that work on a voucher system. Each voucher redeemed is worth one month's mortgage payment, but only three can be redeemed each year, although they can be saved up and used together. The standard rate (8.95 per cent) mortgage offers one voucher a year, the 9.6 per cent mortgage includes two vouchers, and the 10.45 per cent mortgage three.

* The Woolwich has a scheme called Open Plan available to customers with equity on their properties. A portion of the borrowed funds is allocated to a reserve account, which is used to pay the mortgage if a customer wants a break from payment. The maximum mortgage payment break is two months consecutively.

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