Loan Interest Rate

MarinaTiana

When I got my mortgage I took a 125% with Coventry, this took my outstanding debt and lumped it together with the mortgage.

Whilst happy with this when i re-agreed my mortgage in Feb I got an ok rate of 6.52% for 5 years but the loan element of the mortgage now became variable.

This amount is now at £24,000 and I am paying £259 a month, I still have 22 years and interest rate is now 12.84%.

When i received my statement of account for the year I nearly fell off my chair, I have paid £2,500 but only paid off about £50.

When i worked out how much I would actully end up paying it's about £68,000.

I therefore looked at changing this loan to a more reasonable % rate and reducing the time on it but was refused with no reason given.

I earn £48,000 so would have thought swapping would be quite easy but now I'm scared to apply for another loan in case it affects my credit.

I am not increasing the risk as I have this money borrowed already i just don't want to keep paying this high rate !!

Please Help !!

_Andy_

You could have a shop around for an unsecured loan - should easily beat your current interest rate.

Applying isn't going to impact your credit unless you make several applications in a short period of time.

Renovatio

You are in a difficult position; with a 125% LTV no one will touch you for a remortgage - well not at any decent interest rate! Also, as the £24k will no doubt be secured with a charge on your property it will be difficult to find a lender that is willing to let you move it to a low rate unsecured loan in the current climate - refinancing the debt as unsecured is increasing the risk in the eyes of any lender!

Are you able to make any monthly or lump sum overpayments to make the refinancing more attractive to a lender?

Renovatio

Forgot to add, regardless of a persons annual salary; rightly or wrongly, you can only really make one assumption on the financial situation of anyone who has taken a 125% LTV mortgage - it usually reflects financial overcommitment. Sorry if that sounds negative; i would like to hear anyone argue differently.