Re-Mortgaging - Will I have a problem

matt1919

My first post here so hi, and go easy on me!!

Last august me and my partner bought our first property but struggled to get a mortgage. We went through a broker who was a friend of the family so he is someone we can trust.

Both me and my partner have some debts but nothing we cant control, however i dont think my credit history is as good as it could be......nor my partners. This is due to us going over agreed overdraft limits in 2005-2006. On my credit report it shows as been in arrears for 6 consecutive months between 2005-2006 and i think this is what made it difficuilt for us.

After a few failed attempts our broker finally got us a mortgage with gmac rfc for the £118500 required for the property (we put down a 7k deposite, 5%)
Its an interest only mortgage at 6.95% (was 6.75 but it went up just before we signed) I know this isnt a great rate (or at least i dont think so)

Since the end of 2006 both me and my partner have been more careful making sure we dont go over limits or make late payments but we have also now have a little more debt (again controllable debt) due to an addtional loan and credit card but i have also settled in full a couple of long term accounts without any missed/late payments and since then i have been given a credit card with halifax (so if my history is bad, it cant be toooo bad hopefully)

So what i'm asking really is do you think we will have problems re-mortgaging next august (hopefully at a better rate) if we continue as we are.

Yes we probably have a little more debt now but our recent payment history is un tarnished, and we've made and hopefully will continue to make our mortgage repayments without any fault until re-mortgage time next year.

Would borrowing more on the mortgage to pay off debts make it more likely to get a better deal as then the only debt would be the mortgage itself??

If we do struggle then i will be thinking of using my parents as guarantor's (will this help?)

Sorry for all the questions but its my first time on here and i may as well get them in now.

Kind regards

arkie

The problem you may have remortgaging is the amount of equity you have or wont have in your property. Houseprices have fallen 10% this year according to the Nationwide, you have only 5% equity in it (5% deposit) This time next year you probably will have no equity in it. Anybody next year regardless of credit history will struggle to get a mortgage if they have little equity and definatley wont remortgage with no equity.
My advice is look on your mortgage offer and see what your monthly payment will go upto and start saving the difference now or use the money to pay off the 'controllable debt'. Your parents acting as guarantors will make no difference.

koexelek

arkie wrote: »

My advice is look on your mortgage offer and see what your monthly payment will go upto and start saving the difference now or use the money to pay off the 'controllable debt'. Your parents acting as guarantors will make no difference.

Agreed. Also worth approaching the lender to see if they will offer you any incentives if you stay with them for longer.
Interesting that you are still with GMAC-RFC.
In the past, they would sell their mortgages on to other lenders within the year. Perhaps they are not able to offload them anymore ?

matt1919

koexelek wrote: »

Agreed. Also worth approaching the lender to see if they will offer you any incentives if you stay with them for longer.
Interesting that you are still with GMAC-RFC.
In the past, they would sell their mortgages on to other lenders within the year. Perhaps they are not able to offload them anymore ?

Sorry forgot to mention that!

It was passed over to a company called "topaz finance" whom i have never heard of?

Our repayments are currently £702 per month and if we stayed with them, that would rise to £768 according to the doccumentation. Wether thats correct today i'm not sure, i'd have to check.

Thanks

Toughluck

If your GMAC mortgage was linked to the LIBOR rate, GMAC's is 5.95%. On your mortgage offer it will state that your interest rate will increase to x.xx% on top of our LIBOR rate. You should then be able to ball park your mortgage payment once you are out of your deal.

koexelek

matt1919 wrote: »

Sorry forgot to mention that!

It was passed over to a company called "topaz finance" whom i have never heard of?

Our repayments are currently £702 per month and if we stayed with them, that would rise to £768 according to the doccumentation. Wether thats correct today i'm not sure, i'd have to check.

Thanks

I've never heard of them either. Might be worth contacting them to see if they offer any loyalty products for clients who want to stick with them.

I assume the £768 figure is just their bog standard variable rate ?