Mortgage more than equity

ralph71

hey people this is my first post so please be gentle with me if i'm repeating an old post.
We are currently 10 months into a 2 year tracker mortgage with Mortgage Express. our mortgage is for £166k on a property that we purchased for £174k. If at the end of our 2 year deal we want to get a new mortgage deal and our property is now valued at less than our (£166k)mortgage what would happen? would we be stuck on the SVR until property prices rose again?
Apologies if i'm being a bit dense but my brain doesn't seem to be able to work this 1 out

koexelek

You have worked it out completely correctly.

Whilst there is no equity in the property, you won't be able to remortgage elsewhere, so it will revert to their standard variable rate.

Hopefully that SVR will be lower than it is now though, when you drop on to it

Mrs_Chicken

Welcome to the world of negative equity Ralph - this is what is going to happen to millions of us over the next year or so.

Best thing you can do is overpay as much as you can, if your product allows it, or save save save with a view to paying off an extra chunk when your 2 yr deal ends - try to get yourself back below 90% loan to value so that you have a cat in hell's chance of being able to remortgage.

Good luck

confused31_2

If they have got savings couldnt they use that to get a better deal?? however not a lot of people have got savings.

confused

ralph71

Thanks for your replies. Whilst not the greatest news at least it confirms what i thought . good luck to everyone else in the same sit.

Cleaver

ralph71 wrote: »

Thanks for your replies. Whilst not the greatest news at least it confirms what i thought . good luck to everyone else in the same sit.

I wonder if it's a '-uation' or a 'h' that is missing from that word.

Good luck though Ralph.

confused31_2

I wouldnt worry to much, i think by the time your mortgage deal runs out the SVR rate will be down, fingers crossed, it could be worse you could be looking for a deal today and then there would be no chance of getting a good deal.

hope it all works out well for you

confused

dimbo61

14 months ralph before your deal is up
not long I know but could you overpay or save £500 a month for the next 14 months.
The overpayments plus interest saved plus the small amount you would have paid off the mortgage over the 2 years would bring your mortgage down to about £155,000 or even less.
If you could do this then going onto the SVR would not hurt so much
GOOD LUCK