Okay think i posted this a while ago but here is my concern again. Every one keeps saying don't worry about it but i think i'm right to be concerned or at least right to be thinking about it.
I don't know how mortgage renewals work and don't know anyone who has been in negative equity and had to renew their mortgage.
Here's the situation. We took out a 100% mortgage October 2007 to the amount of £174,000 last time i checked the house was worth £168,000 two months ago. I live in an area where house prices have been falling below the average. When we renew next October house prices will have fallen further. We won't have paid off that amount so in theory it will be a 100+% mortgage renewal. How do banks look at this? Do we need to put the cash up front when next year comes? Will they refuse to give us a better mortgage and just leave us on our current mortgage but at the increased interest rate? As we were on 1st time buyers discount rate. Its something like 3.5%
We have savings upwards of £12k and house hold income of £50k+ we are 25 and 24 so have time on our sides and can afford to increase our payments.
I went into the bank a few months ago to express my concerns but she wasn't very helpful, she just said we would be in contact before your mortgage is up to offer you a good deal.