Bit worried...95% mortgage

Sarahfreeman

hello
just want some advice please...
me and my boyfriend brought a house end of last year 100% mortgage -repayment on £129500 house (we dropped the house by £10,000) plus £3000 worth of fees, at 5.88%. at the time we were told not to go for a 5year so we opted for 2 year-big mistake! never mind anyway, we are really worried about when we remortgage next year i know im asking this early but we want to be prepared and know how much to save in advance. After the two years we should of paid off about £2500-£3000 capital right? a house oposite us has gone on the market for £140,000 but they have just dropped to £135000 is this roughly what our valuation would go by? sorry i probably sound really niave! just very confussed, would we need to get a 95% fixed mortgage or go on variable which is best?? we also have a car loan of £4500 shall we pay this off asap? also im not sure if you need this information but we earn £38,000 combined
thanks for any help, we brought the house when we were 21...told earlier you buy the better...now im thinkin why didnt we rent!lol
thanks in advance

herbiesjp

If you stay with your current lender, they will offer you new deals nearer the time hopefully - I say hopefully as if you are with NR they are not offering existing borrowers new deals only standard variable rate.

If you went to a new lender, a surveyor would need to be sent round to give a value on the property - they will not look at what prices have gone on the market for, they will look at what prices they have sold for.

In order for you to try and get better rates, you should be looking to have as much equity in your property by the time your deal runs out. 95% mortgages are few and far between, and are at higher rates.

Ideally you should be looking to over pay if possible (assuming your deal allows you to) in order to bring down the mortgage balance as much as possible in that time span. By doing so, you will maximise the equity you can hope to build up in your property to counter any further drops in house values.

Crokeria

Work out now what the repayment would be on the standard variable rate. See how much more it would be if you simply stay on the SVR for a while and ride out the market. 7.49% SVR sounds bad in comparison to people paying say, 5.99% but historically its not THAT bad, I remember interest rates at 15% in the early 90's. Find out what the figure is, then work out if you can afford to pay it. Worse case scenario you could switch to interest only for a few years, I did and it saves me £150 p/month.

choccybuttons

The rates for 95% mortgage kinda suck and they are not many deals out there at the moment, I know Im looking. If you can afford it you might want to make over payments as the rates for a 90% mortgages are so much better and there is much more choice

carbonmonoxide

herbiesjp wrote: »

If you stay with your current lender, they will offer you new deals nearer the time hopefully - I say hopefully as if you are with NR they are not offering existing borrowers new deals only standard variable rate.

If you went to a new lender, a surveyor would need to be sent round to give a value on the property - they will not look at what prices have gone on the market for, they will look at what prices they have sold for.

In order for you to try and get better rates, you should be looking to have as much equity in your property by the time your deal runs out. 95% mortgages are few and far between, and are at higher rates.

Ideally you should be looking to over pay if possible (assuming your deal allows you to) in order to bring down the mortgage balance as much as possible in that time span. By doing so, you will maximise the equity you can hope to build up in your property to counter any further drops in house values.

Hi-following on from this. I will be looking to remortage next April if my current provider won't offer a good deal. As you say it is better to overpay the capital if possible. When remortaging is it likely I would be offered an option to pay off some capital at the start of the deal to lessen the amount borrowed? Sorry if this question seems naive but I was a FTB last time and have never remortaged.

herbiesjp

When you come to the end of your current deal, you will go onto a lenders standard variable rate normally

On this rate, you will be able to overpay as much as you want without penalty. So either with your current lender or with a new lender, you will be able to overpay before being tied in to a new deal and limited overpayments within that deal