Remortgaging Advice Required (Northern Rock)

thellers

Hi,

My wife and I are in a bit of a 'mixed bag' situation, with a mixture of worrying bad points and positive good points. We'd therefore really appreciate some advice!

Here's the facts...

We have a £148,000 repayment mortage (100% LTV) with Northern Rock, over a 30 year period, which we got in October 2006. 10% of this was as an unsecured loan. Our current repayment is £890 per month.

The Bad:
- It's with Northern Rock.
- It's a 100% LTV Mortgage.
- It's over 30 years.
- The house didn't have a lot we could do to it to increase its value -- all the work we've done to it has been largely cosmetic, so we've done nothing to bump up the value of the house
- We bought pretty much at the very top of the market (October 2006)
- Hence, we're probably already in negative equity

The Good:
- We took a 5 year fixed deal @ 5.99%
- It doesn't expire until October 2011
- We took a lot less than the banks said we could afford (they were offering us up to £230k at the time!)
- We're financially stable and can afford to overpay a bit at the minute
- We've since accrued a lump sum from a relative passing away - about £10K

So, my questions are as follows:
- With the £100 a month or so we could afford at the moment, are we best to save like hell towards a deposit for a new mortgage when the time comes, or overpay the current mortgage?
- Likewise, is it best to dump the £10K we currently have into the current mortgage, or continue to save it in our high-interest account?

So, although we're financially sound at the moment, it's clear that we are a in a pretty high risk category given our 100% LTV, 30 year term, and the time at which we bought.

Hopefully some of you will have some good advice / opinions. Basically, we want to do the best we possibly can with the money we have while we can afford it, so that we don't end up in serious trouble later.

Thanks,

AT

plumtreebabe

hi there, I used my mortgage calculator spread sheet and it seems like it's neck and neck with either paying an extra £100 per month or putting it into the high interest account. Don't dump the £10 k into your mortgage until you know how much you can overpay in one go as you might have to pay penalties for overpaying too much (usually six months interest!). Check with your mortgage agreement how much you are allowed to pay off - we have a five year fixed rate mortgage taken out Dec 2007, over 15 years (we're old!) and we are allowed to over pay (that is above the current amount they take out each month) up to £500 per month. We are going to try and overpay by £50 per month for the next year, then by £100 for the next year and so on and hopefully clear it in 9 years instead of 15.

Keep your £10,000 in your high interest account and do the monthly overpaying, you can always stop it whenever you want to, and pay more if you wanted to, AND you've got an emergency fund if ever you e.g. lost your job - you would still be able to pay your mortgage for quite some time. It would be much harder to get that £10k back if you suddenly needed it!