Need to remortgage.....but don't understand?!?

dawnylou

Hi all,
We currently have a fixed deal mortgage with Northern Rock which comes to an end in Feb and they have sent us a letter to advise that they won't be able to offer a better deal and we will be better off looking elsewhere....

So today I thought I would start researching it...

Bought the house in 2007 @ £114,000
After deposit was put down we took mortgage of £109,242.35
The rate was fixed at 5.99% until Feb 2009

Mortgage now stands at around £107,000
From what I can see online the property value has dropped to £109,000 or thereabouts.

Reading through Martin's mortgage page I have clicked on every link to get quotes and rates etc only to be told on every single page that unfortunately no product matches, or no suitable products and other messages to that effect.

Why is this?
I am so worried about what will happen when the deal ends.

Any advice would be very much appreciated!!!

ILW

dawnylou wrote: »

Hi all,
We currently have a fixed deal mortgage with Northern Rock which comes to an end in Feb and they have sent us a letter to advise that they won't be able to offer a better deal and we will be better off looking elsewhere....

So today I thought I would start researching it...

Bought the house in 2007 @ £114,000
After deposit was put down we took mortgage of £109,242.35
The rate was fixed at 5.99% until Feb 2009

Mortgage now stands at around £107,000
From what I can see online the property value has dropped to £109,000 or thereabouts.

Reading through Martin's mortgage page I have clicked on every link to get quotes and rates etc only to be told on every single page that unfortunately no product matches, or no suitable products and other messages to that effect.

Why is this?
I am so worried about what will happen when the deal ends.

Any advice would be very much appreciated!!!

Looks like you have a problem.
Most lenders now want at least 10% deposit/equity.
You appear to be in or very close to negative equity.
If you want to remortgage you will need to find £15-20k cash.
Failing that just go with what your current lender will give you.

WillowCat

Don't panic.

The worst that can happen is that you move onto NR's standard variable rate. They can't kick you out of your home just so long as you can afford those repayments.

NR want people to move as they want to reduce their mortgage book. You don't have to however, as you would have taken out (probably) a 25 year mortgage.

If you are lucky enough to have plenty of savings then you can reduce your mortgage and move.

If you don't have any savings at the moment to throw at the mortagage to reduce it's balance, then consider trying to save up as much as possible, as soon as possible. When you have enough to remortgage at, say, 85% LTV then you can move. Until then, you can stay put.

feisty1

dawnylou

You have an LTV of approx 98%..........LTV is a term used by lenders to assess the size of the loan you are requesting against the value of the property against which it will be secured. An easy example is - a £90,000 mortgage on a home worth £100,000 would have an LTV of 90%.

You will no longer find a lender who could offer you a 98% mortgage, however you're in the same boat as millions. You do not have to leave NR, you will automatically be transferred on to the SVR (standard variable rate) somewhere in the region of 5.4%. Did they include yr new monthly mortgage payment, if so how is this in comparison to what u have been paying.

And, don't worry!

dawnylou

Thanks all.

ILW - There is no way we can find that amount of money!! lol
That's over a years wages!!

WillowCat - I'm just worried we won't be able to afford them if the rates start to go up! Btw our term was 35 years.
We only have £3,000 in savings but it's paying for our wedding in April

feisty1 - Thanks for the example and explanation. They didn't advise what the new payment would be if we stayed. We currently pay £620 per month and can afford to still do so, but we can't afford for it to increase!!

It is just so frustrating that we tried to be sensible and put down a deposit of around £5k and then have been making extra payments whenever we have had extra cash and yet what good has it done us?? Absolutely none

We will be fine and I will try to remain positive but I know if the payments go up we will be in big trouble.

Shazwellyn

dawnylou wrote: »

Hi all,
We currently have a fixed deal mortgage with Northern Rock which comes to an end in Feb and they have sent us a letter to advise that they won't be able to offer a better deal and we will be better off looking elsewhere....

Surely, the variable rate with Northern Rock is BETTER than your fixed rate? You might be far better off than you thought! When you see your reductions, you can start really accelerating your mortgage.... try becoming a mortgage free wannabe here on money expert! I might be wrong, but I thought that the end of a mortgage deal, doesn't warrant you to be chucked out of the mortgage company! You are in a strong position now, not a weak one!

dawnylou

Shazwellyn - I don't know, I can't find out what the rate is?? I looked on the website but it has a table showing many different rates so I don't know??
However what I am worried about is if rates start going up we won't be able to afford the repayments.

We were in the MFiT challenge however we have had to stop overpayments for a little while just until after the wedding, as soon as the wedding passes we will be working hard at trying to get rid of the mortgage. Especially as we may wish to start a family and so will need to reduce our outgoings as much as possible.

opinions4u

dawnylou wrote: »

Thanks all.

ILW - There is no way we can find that amount of money!! lol
That's over a years wages!!
Fine. So you're staying with Northern Rock.

WillowCat - I'm just worried we won't be able to afford them if the rates start to go up! Btw our term was 35 years.
Eek. You need to consider how to reduce the term. If not now, at some point in the future. Overpayments work wonders for this.

We only have £3,000 in savings but it's paying for our wedding in April
Hope it all goes well.

feisty1 - Thanks for the example and explanation. They didn't advise what the new payment would be if we stayed. We currently pay £620 per month and can afford to still do so, but we can't afford for it to increase!!
You need to consider either overpaying directly to the mortgage, or setting funds aside in a savings account with a view to reducing the mortgage debt at some point in the future. Why did you take out a mortgage if you couldn't afford for payments going up? It was always likely that at some point over a 35 year period your payments would rise.

It is just so frustrating that we tried to be sensible and put down a deposit of around £5k and then have been making extra payments whenever we have had extra cash and yet what good has it done us?? Absolutely none
Unlucky timing. I would still expect you to do well out of home ownership in the long run.

We will be fine and I will try to remain positive but I know if the payments go up we will be in big trouble.

Keep staying positive and build up a little cushion after the wedding so that you can survive the tougher times.

feisty1

the svr is around 5.4% from jan

Shazwellyn

dawnylou wrote: »

Shazwellyn - I don't know, I can't find out what the rate is?? I looked on the website but it has a table showing many different rates so I don't know??
However what I am worried about is if rates start going up we won't be able to afford the repayments.

I think the variable rate is 5.34. Here is a link for you to check out http://www.mortgages.co.uk/mortgage-lenders/Northern-Rock/Northern-Rock.html I don't think you have to worry about increasing mortgage rates as the bank of England is likely to decrease this EVEN FURTHER, passing the savings down to you. The government wants to kick start the economy to encourage us to spend. They hope that if we spend, this might limit the damage to people losing their jobs and end up on benefits costing the government MORE money! This is a world wide phenomenon! My advice to you is to pay off your debts, stash as much in your mortgage and use this time as an opportunity and NOT something to be worried about. There will be a time in the future that banks will be more confident and more products will be made available later on. Keep an eye on new products over time and jump in when the time is right! Remember life is an evolving changing thing and never stays still... life holds no guarantees you just have to stack the odds in your favour, so being scared that your mortgage goes up is a fear that hasn't happened yet - a useless energy! Your home is the roof over your head and you have to prioritise this before you eat, drink and be merry!

dawnylou

Thanks again

opinions4u - We have already been overpaying not by a great amount but every little helps overpayments are just on hold til after the wedding.
Hopefully payments will go down - and if they do we will carry on paying what we pay now. (i.e if goes down to £600 will be overpaying by £20 per months still as we are used to paying £620 now)
When we took out the mortgage we were advised that when the fixed deal ended we could just change to another fixed deal on a lower rate if the rates had gone up too much....never did we consider that we might not be able to do this. I know it's our own stupid fault lol

Thanks for that feisty1.

Shazwellyn - thanks for posting that as well as the link as I now can understand where you got that figure from
I hope you are right about rates decreasing more!! lol

I am trying my best to remain positive - as a sufferer of depression I have made it one of my resolutions to try and be more upbeat and positive and try to have a better outlook on life