Advice: Remortgage or Not?

jayoh

I know there's an exceptionally large thread for people with Northern Rock mortgages and I have had a look at it, but it looks like there are more people with questions than with any answers on there, so forgive me for starting a new thread!!

Our fixed rate mortgage with NR was up in February of this year. We didn't look into remortgaging at the time as we have had our house up for sale since last August so obvously didnt think it was necessary. After a couple of failed offers on the house we have decided that we may just try and get a new mortgage deal rather than selling.

However we do have a couple of problems (as it appears do most people!)

Our mortgage is currently Interest Only, we really do need to get onto a repayment if we are staying as we don't have any additional arrangments to pay the capital on the house.

Due to the current housing market conditions, our house is worth slightly less than it was, and as we had a 100% mortgage (Together mortgage with a 10% proportion unsecured) our current LTV is at about 93%

We know we have two options; stay on the deal we are on & hope we do sell the house eventually, or, remortgage and stay where we are.

The only problem is, would it be worth remortgaging right now as we would have to pay mortgage fees that look to be around £1000 & due to our ltv being high, we woudl have to incur a higher lending charge which looks to be around £2000 also. This means to remortgage it's going to cost us around £3000. Add to this that we would go from an interest only to a repayment and therefore the cost of our monthly payment actually increasing, is it worth remortgaging right now?

On to our second option; to stay on the interest only NR SVR until we sell (IF we ever sell!) but in the mean time worry at the potential of our house value dropping even further and moving dangerously close and if not into negative equity and therefore being stuck on the interest only mortgage for the near or even longer-term future? and therefore paying out £680 a month for no reason at all?

We really do feel as though we are stuck between a rock and hard place on this one and would really,reallyl appreciate any advice people might have one what they thing we should do.

Sorry it went on so long too

happybroker

in all honesty i think you have only one option.

As you are in negative equity you aren't going to be able to remortgage I'm afraid unless you can pay a lump off what you owe now.

Even if you got your lending down to 95% of the value of the house the rates wouldn't be that much better then svr with the rock.

would love to be more positive but better you know where you stand

Conrad

I agree with Happy

Furthermore prices have fallen and valuations are generally comming in quite a bit lower than clients expect.

I went right through the last crash and was an adviser from 1991. My advice is tough it out and forget value for the next few years. Of people I knew last time that sold at a loss, ALL of them later regretted thier choice and wished they had just toughed it out.

Remember in 5 years time when everyone again says "properdee only goes up in'it", to question this mantra. People have such short memories, and all the muppets once again will be humming the mantra.

Best of luck, and try and and get on with life without even thinking about value. I think it will be at least 2 years for prices to go up to where they were - but thats only 17520 hours away!

jayoh

Thanks for the advice, but just to clarify, we are not in negative equity as it stands at the moment, if the value of our house drops by another £8K or so then, yes, we will be. And this is my point, if it does drop that much then we will be stuck on the interest only mortgage with no way out until prices rise again, my question really was do we swallow the expensive cost of re-mortgaging whilst we still have some equity left and pay any costs however big they may seem in doing it, or not and deal with the waste of paying for an interest only mortgage for the enxt 3-4 maybe 5 years?

Toughluck

jayoh,

using 93% LTV as a bench would mean that all figures would have to come in on what "you" think they should do. For exapmle the settlements figures come in bang on and more importantly as beenmentioned the value of the property coming in what you need it to. albeit you have a liitle scope for movement but should it come in lower, you and I know that a re-mortgage is not an option and just riding this storm would be of more benfit to you.

poppy10_2

jayoh wrote: »

just to clarify, we are not in negative equity as it stands at the moment, if the value of our house drops by another £8K or so then, yes, we will be.

If your house hasn't sold after a whole year on the market, then it obviously isn't worth what you are asking for it. If you took out a 100% interest-only mortgage 2 years ago, then you are almost certainly already in negative equity. Sorry.