Help with remortgaging advice please

Mourinho_2

Im only young and not very knowledgable about mortgages but ours is up on the 1st March 2009 after being on a 2 year fixed interest only paying 523.00 a month.The mortgage is for 126,000 pounds over 30 years but we were given 20,000 pounds as a present the other day from a relative.Do we put that into the mortgage now before we go to remortgage or do we wait till then before putting it down?Also when do we need to go to see about getting a new mortgage and would we be safer going for a full repayment mortgage?
Sorry if i sound a bit stupid but i need help please.

feisty1

Mourinho vbmenu_register("postmenu_14930957", true);
Are you on interest only due to affordabiity?
How much can you comfortably afford each month?
Are either of yr jobs threatened by redundancy in these uncertain times (very importat point to consider)
Other than yr 20k, do u have an emergency fund
Whi is yr current lender

Mourinho_2

Was interest only as we only got married then and didnt know how things would be financially.Wife is a supply teacher and cant get a permanent post so its hard to gauge each month what she will earn.Think we could stretch to 600 pound a month but that would be the limit.My job should be safe,we dont really have an emergency fund and our provider at present is the HALIFAX.

dimbo61

First of all what a great relative to give you £20,000 like that.
So after nearly 2 years of living in your home you still owe £126,000
and have no repayment vehicle to actually pay off the debt.
Depending on the deposit you put down you might well be in negative equity right now !
You dont mention the fixed rate you are on right now but I think its going to be a whole lot more expensive come March 2009.
If allowed ( contact lender ) I would pay the £20k off the mortgage now or in March 2009 if not allowed
The relative wanted you to pay this money off your mortgage Yes/No
Get a repayment mortgage with unlimited overpayments and if money is tight consider long term fix and overpay when you can. GOOD LUCK

feisty1

so much is going to depend on the value of yr property, what is it approx?
i would imagine yr current mortgage will only allow u to overpay by 10% ie 12,600 that is whilst yr tied in
so put yr 20k in an account offering u a decent interest rate, so as not to be tempted to spend put it in a notice account until march (check t&c's) maybe leaving a few K elsewhere for emergencies
you would probably benefit from an offset mortgage of which there are a few, by depositing the lump sum this will bring down yr monthly payment, some u can overpay without penalty, if u attached yr current account to this & set the mortgage payment for the day after yr salary reaches yr account this would also bring down the monthly payment
after depositing the lump sum if u needed to borrow back the funds u could do this also
plenty to think about

Mourinho_2

Thanks there.Yeah the reative says we HAVE to use the money to pay off some of the mortgage.The house was 156000 and we put down 30000 of a deposit(savings,wedding money and helpfull parents).We bought when things were booming and didnt think we would get onto the housing ladder,thats why we went for a interest only as we thought the value of houses would continue to rise!Thats why this time round we really want to get it right.The fixed rate now is 4.99 and goes to 7.25 in march.When should i start to see about re-mortgaging?

feisty1

start by reading up on things now get as best u can 2 get a good uderstanding of mortgages in general, keep an eye on rates, bank of england meet every 4th thursday.........u can book rates with some companies as far ahead as 6 months but watch in case u have to pay & then withdraw cause uve seen a better deal elsewhere

grogdog

if you do nothing and move to svr on 126 your payments are going to jump to 730+, if you move to repayment for 106 over 25 years your payments will still be over 700

dimbo61

If you paid £20k off the mortgage and moved to YBS ( for example ) 5 year fix at 5.99% over 25 years it would cost £682 each month for next 5 years.
Or a 5 year offset fixed at 6.29% would cost £701 a month.
You would then save at 6.29% tax free by putting any savings into the offset account.
See what Halifax offer you first but if your relative gave you the money to clear some of the mortgage then do that and take them out for a nice meal to say a huge THANK YOU