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Mortgage woes

lumoruk Avatar
banned7y, 11m agoPosted 7 years, 11 months ago
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.
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lumoruk Avatar
banned7y, 11m agoPosted 7 years, 11 months ago
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#1
you may be better asking this on Money saving expert as there are some real whizz who are FSA trained on there and they will point you in the right direction and possibly even find you a good deal
good luck

the other thing is dont worry to much about the prices dropping they will recover in the Long Term [COLOR="Red"]so sit tight [/COLOR]
#2
agreed MSE is a better option for this kinda topic, I have a feeling though you may very well be pretty hard pressed to find a 100+% mortgage in this current financial climate
banned#3
Can't stand MSE :CRY:
#4
try talking to your bank manager or seek some other (but free) sort of independant advice.
banned#5
are you sure your current mortgage has not tie-in period after the reduced rate ends?
#6
You are allowed to pay off upto 10% of your mortgage each year, so why not use your savings to do this.
banned#7
csiman
are you sure your current mortgage has not tie-in period after the reduced rate ends?


I'm 90% the financial advisor would have told us that, i.ve read the contract no tie in. plus the girl did look at the account i'm sure she would have said.
banned#8
choc1969
You are allowed to pay off upto 10% of your mortgage each year, so why not use your savings to do this.


The house was built in 1937 and needs the odd improvement. It was ex rental so they went cheap on everything but the bare legal requirements.
banned#9
we have a very good lady who looks like Mrs Doubtfire who is an independant financial advisor, I was sceptical about 5 yrs ago but her advise was spot on, if you can find one around who can give the best advise I sugest speak to them, its saved me a mint over the five yrs and my mortgage is down to 29 grand. I would give the bank a miss..
#10
dog_cop
we have a very good lady who looks like Mrs Doubtfire


and the fact she looks like Miss Doubtfire is an intergal part off this post. :thumbsup:
banned#11
MinstrelMan;3766725
and the fact she looks like Miss Doubtfire is an intergal part off this post. :thumbsup:

thats what I thought but the odd thing is ..she does :p
#12
Look in your local yellow pages, or ask around, for an independent mortgage advisor who doesn't charge a fee, they will be the best people to advise you on what to do without being biaised towards their own company. Alternatively, as suggested above, give your bank a ring and ask to speak to the mortgage advisor who will be able to answer your questions for you, they'll try to get you in for an appointment for their own mortgage but a) you don't have to and are quite able to just ask questions and b) in the current climate their mortgages are probably quite competitive, once upon a time the banks were more expensive than your Halifax/Abbey etc but nowadays they may be just as good so keep an open mind. The key thing with renewals is the charges you have to pay so it may even be worth paying a bit extra with your current mortgager than swopping to someone else, whatever you do get the right advice first.
#13
Are you scheduled to revert to a SVR after 2 years? These are not the greatest deals out there by any stretch, but if you cannot re-mortgage without paying off a good chunk you may be able to afford to stay on that for a while until you find a better deal. There should be no tie-ins at all once on the SVR so you could switch at any time. If you are on a tracker, you may find that you revert to a reasonable tracker rate after 2 years anyway.
Good for you for looking ahead, but definitely try to get advice from an independant adviser closer to the end of your term not the banks!). I wouldn't worry - there are plenty of people out there suffering more than you are right now.
banned#14
lumoruk;3766635
I'm 90% the financial advisor would have told us that, i.ve read the contract no tie in. plus the girl did look at the account i'm sure she would have said.

being sure is not the same as hard fact... :thumbsup:
banned#15
If you have no tie-in then why not look at the current long term fixed rates and switch now.

neg equity of £6000 but savings of £12000 and decent income then you may well get a reasonable long term fix.

If you want proper advice, better off going to 'motley fool' or MSE mortgage section.
banned#16
csiman
If you have no tie-in then why not look at the current long term fixed rates and switch now.


Sorry i thought you meant after the 2yr variable :) i'm tied in till the end of the 2yrs which is next october.
[mod]#17
This won't make good reading then. http://news.bbc.co.uk/1/hi/business/7782939.stm

Remember last time this happened in the 80's. Sad times.
banned#18
Syzable
This won't make good reading then. http://news.bbc.co.uk/1/hi/business/7782939.stm

Remember last time this happened in the 80's. Sad times.


Yeah thats what made me think about this :-) but he does say we are half way through this so another 15% to go. But house prices in our area are holding up better. If coventry are willing to let us stay on the increased APR when our 2yr variable discount runs out i'm happy. We can afford that we also have good families behind us.
#19
I'm afriad house prices have an awful lot more to come down. The government are trying to pre-long it though, however it's going to happen. So many are going to be in negative equity - the countries tax system will be punished for years. Not through no fault of any home buyers though, and wish everyone in the boat like yourself the best of luck.
banned#20
lumoruk;3767441
Yeah thats what made me think about this :-) but he does say we are half way through this so another 15% to go. But house prices in our area are holding up better. If coventry are willing to let us stay on the increased APR when our 2yr variable discount runs out i'm happy. We can afford that we also have good families behind us.

Who is your mortgage with as they may well have moved more inline with the current base rate by then? Fingers crossed but I'm sure you won't have a problem as you can pay the repayments.

This negative equity problem only hurts people who cannot afford the repayments or wish to move but with interest rates set to fall to near all time lows, the effect won't be like the 90's (remember 15%! - I do!).
banned#21
csiman
Who is your mortgage with as they may well have moved more inline with the current base rate by then? Fingers crossed but I'm sure you won't have a problem as you can pay the repayments.

This negative equity problem only hurts people who cannot afford the repayments or wish to move but with interest rates set to fall to near all time lows, the effect won't be like the 90's (remember 15%! - I do!).


As mentioned above its with the coventry and no i wouldn't 15% i'm 25 :p

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