Kensington mortgage

tails_5rifles

Hello all, I'm after some more of the wonderful advice that this site is so good at providing!

I currently have a interest only mortgage with Kensington (I know, I know...) for £116k for which I pay £750 PCM at an interest rate of 7.5% fixed for 3 years. I am currently 1 year in to the fixed rate. My income is £26k PA and the house is currently valued at £130k

The reason I had to mortgage with Kensington was due to a satisfied CCJ on my credit file for £1200 from Lloyds Bank, this CCJ has less than a year left on my file and will be long gone by the time my fixed rate is up.

My credit score is much better now (830 according to credit expert as opposed to 550 when I took the mortgauge out) and I assume it wll be better still once the CCJ is wiped. I now NEVER miss a payment! :cool:

My question is: how likly am I to get a mainstream mortgauge deal once my FR is up? I know that Kensington love to pump the rate up to 10%+ once the fixed rate is up and I would really like to avoid giving them anymore of my hard erned!

All the best to you all, Tails.

tails_5rifles

Bumpage.

Anyone?

Toughluck

Depends on the loan to value and what you earn really. sounds as though you have a good chance of it but need more info.

herbiesjp

In terms of getting a better rate due to your improved credit file/history - it looks like you will be back to mainstream rates.

However, at present house prices are going down and lending criteria is getting tighter.

So what kind of deal you could get will depend still on numerous factors like your income, property value, other debts you may have etc.

Having said that, even the higher loan to value deals will be better than 10% with Kensington

Locoblade

I think the biggest risk is that in 2 years time you find yourself in negative equity with a house worth under £116k so unable to remortgage. As you're on interest only, you're loan amount is still going to be £116k in 2010, so you can't afford more than about 10% drop in house prices otherwise you'll be over that borderline, and even if the price stays at what it is now, you're still only just under 90% LTV so if it drops at all, it might make most mainstream products unavailable.

Can you not convert your existing loan to repayment rather than interest only, or even better overpay in excess of the repayment level, that way you'll reduce your capital a bit over the next 2 years so give yourself a bit more of a buffer if house prices do continue to fall?

dimbo61

So you have 3 options
1 Contact lender and ask if you can change onto repayment ( what will it cost each month and what fees )
2 can you overpay on the interest only mortgage and if allowed are there any limits .
3 save into a cash ISA,s for the next 2 years ( the rates will not be as good as repaying mortgage but you will still have more money to build up equity in your property. GOOD LUCK

luckyfool

I would echo comments above. If you make all payments ontime with the Kensington mortgage, and don't acquire any new adverse credit then you should qualify for mainstream rates at 90% ltv's. You should try to build up savings to overpay into your mortgage when your deal ends to give you a better chance of qualifying for a 90% or better deal with a new lender.