Already thinking 2 years ahead and things don't look good!

Tassotti

Andy, no point in an ISA..Get as much as you can off your mortgage.

You say it is sub-prime. When you remortgage, can you go to a normal lender?

If not, in two years time you may struggle.. If it is over 7% now, then a sub-prime lender will charge over 10% at the moment. However, things might change in 2 years!?!

zAndy1

I haven't a clue whether I'll be able to go to a normal lender, I doubt it as my bankruptcy etc won't have dropped off my credit file by then (although will in Sept 2011 i.e. 1 year after the end of our fixed rate). Perhaps we'd be better off saving as much as possible, putting up with the increased rate for 12 months and then trying to re-mortgage when I've got a clean credit file? Something I hadn't really considered to be honest but might make sense. To be honest it's difficult to say what will happen in 2 years, my main focus is to reduce the outstanding mortgage balance as much as possible to enable us to remortgage despite the fact house prices are falling as we're probably currently in negative equity.

Tassotti

Andy, no-one knows what the banking situation will be in 2-3 years time.

My advice is, again, pay off the lender as much as you can, and you will be in a good position once your bad debt comes off your file.

ALIBOBSY

Bear in mind alot of subprime mortgages don't allow additional payments without some kind of penalty. Might be worth checking your paperwork. May be less of a penalty to make one large payment in 2 yrs time?


Woops reread the thread again and see you have touched on this issue.
Personnally for me I would save all I can and reasses when you get closer to the end of the fixed rate. This gives you more flexibility, but at the end of the day its up to you.
Good luck
ali x

dimbo61

hi zANDY1
I would chance to a repayment mortgage as the costs each month is £203 and you will make sum head way on the debt( mortgage ) over the next 2 years. Fee £75 !
If you are allowed then overpay each month by £300 and also put money £300 into a cash ISA paying 6/6.5% to buid up an emergency fund and pay for fees in 2 years when you re-mortgage.
You pay for life insurance ( through the lender ? ) can you cancel it and take out level term life insurance through cavendish online ( much cheaper )
Changing to a repayment mortgage and saving money in ISA,s / overpaying shows other lenders that you have got your finances in order and have built up more equity in your home.
Dont worry about house prices just work at clearing you debt and becoming MF GOOD LUCK

zAndy1

Thanks for the reply, a couple of problems though. The mortgage offer says regular overpayments may be made as long as each payment is at least £5000! So overpaying by £300pm doesn't look like it's an option. Also for some bizarre reason which I really don't understand it doesn't look like I can get an ISA due to my credit history. I've applied for one with co-operative bank (who I have been with for 3 years since my bankruptcy) and they refused my application. I honestly don't understand why applications for an ISA need to be credit checked but that seems to be the case, how that helps people with bad credit histories to save money I don't know.
As far as life insurance is concerned we are with Norwich Union and the premium is quite high (£50pm) due to adverse health problems with our parents and myself. I'll certainly look into the cavendish online one though.

Thanks
Andy

firesidemaid

there is a difference between 'overpaying' your mortgage and converting to a repayment mortgage, even though the outcome with both is the same.

have you done a full soa to determine your incomings and outgoings and had a look to see if any savings can be made for a start - it is amazing where 'free money' can be found!?

as your mortgage rate is 7+%, unless you can find a savings account paying mega%, then convert to a repayment mortgage - just be sure you are happy you can meet the increased payments. any extra save in an isa etc (i can't believe you can be refused for this - surely they are refusing your right to your tax-free savings allowance) - what about the post office?

if your mortgage co. only charge £75 to convert and you find you have more money in a few months/year then you could then reduce the term (subject to a charge) to increase the capital payments again (again, reducing the term not overpaying, although same outcome).

just make sure with the repayment that your monthly payments stay the same (check with lender) and the capital decreases, not the monthly payments, as some lenders do this.

good luck x