Remortgage query with negative equity - expert advice please!

Abbaliz

Hello

please would someone be able to advice me:

Our mortgage deal comes to an end in Novemeber next year (2009).

We are currently on a 2 year fixed rate deal with the Alliance and Leicester at 5.89%

We bought the house in November 2007 for £140,000 with a 10% deposit so started off with a mortgage of £126,000

We are in a positition to be able to pay 10% as a capital repayment this January which will obviously bring the amount we owe down but we still think that we will probably end up in negative equity by the time we come to remortgage.

1. Does everyone in negative equity just have to go onto their lenders standard variable rate or we will still be in a position to shop around for whatever deal we can with other lenders?

2. the alliance and leicesters website link for mortgages for existing customers displays deals lower than their SVR which dont seem to have any maximum loan to value (e.g. 2 year fixed 6.69% with £599 fee)- would we still be eligible for this if we are in negative equity or do we automatically go onto their SVR (currently 7.19%) ?

3. Is there an easy way or formula for working out what the best deal is when you have to pay a fee, e.g. comparing a 6.69% 2 year deal with a £599 fee against a 6.49 % deal with a !% fee - how do you work out which is the best one for you in terms of what you end up paying with the fees ?

4. Can fees for mortgage products be added to your mortgage or do you have to pay them up front?

any advice appreciated

thank you
long live ABBA:T

Abbaliz

Hello again - as a supplement to my original question i have just read something on another thread that worries me:

when we make our overpayment of 10% in Jan 2008 (this is the maximum amount the A and L will allow us to pay as a capital repayment without penalty), we were going to do this in order to bring our monthly repayments down, but will this be the case or will only the term of the loan shorten by overpaying it?

we really need to get our monthly payment down- can we request the A an L to put our overpayment money towards doing this instead of shortening the loan?

silvercar

1. Other lenders will not be interested in taking on a mortgage greater than the property value.

2. Generally your existing lender will offer you a new deal without revaluing, so the megative equity shouldn't be a major problem; though some deals may only be open to those with low LTV.

You should be able to ask A&L to use the capital repayment to reduce the monthly payments. If you "really need" to do this, think carefully, would you be better off keeping some of that money in a savings account, just in case you need it in the future?

3. I think someone on here has posted an excel spreadsheet otherwise you need to do the caluclations yourself (or post some figures on here for someone to do them for you).

4. Depends on the lender.

Abbaliz

Thank you for your advice - we will still have some savings left if we pay off 10% lump sum but we do want to reduce our mortgage payment ASAP which is why we want to pay off as much as we can without penalty.