Mortgage split into 2 loans- take penalties or not?

Smurggle

Hi there, after some general advice please, bear with me as it is complicated!

We currently have a mortgage with Halifax that is split in two as we moved last year and they advised to do this to avoid penalties. The first ends at the end of the year and is the larger loan of 101000, the second ends June 2009 and it 67000. Our plan was always to put up with their SVR for 6 months and then join the loans together as they both have penalties to get out of them.

Now the plan has gone a bit wrong, I am not sure whether we are in negative equity, it was a new house and no others have sold in the last year, we paid significantly less than others around us as the company was going under but we did have a 97% mortgage.

My question really is do you think we should just sit tight and see what happens in the next 6 months or do you think we should pay the penalty and try to fix our rate now (if they will let us)? Also do you think they will force a valuation if we are that close as their maximum LTV is 95%. Obviously as house prices are falling our house will probably worth less in 6 months but then we have paid about £8000 of early repayment charges and arrangement fees in the last 5 years and we keep having to add them to the mortgage, this should be money in our house and not in Halifax's pocket.

Help!