mortgages for dummies!

bubblepop_2

I bought my first 1 bed flat in summer 2007 with my 2 year fixed term up this summer. I have no idea where I stand with re-evaluating my mortgage - I was on a homestart mortgage which planned for me to progress from interest only to repayment after the 2 years. I'm not sure for now whether I can afford to go onto repayment, but I also don't want to get tied into having to stay in the same flat for years to come, as since buying I've started seeing someone and the likelyhood is we may be looking for a bigger property in the next year or so.
I've resigned myself to the fact I'm going to lose money on the flat - especially as it was a new build, but am just completly unsure of what my options are with a new mortgage rate and am scared of being forced to stay in the same small flat for years to come!
Can anyone give a mortgage dummy some help?!!!!!

feisty1

Ye make an appointment with an adviser

Gorgeous_George

Firstly, the good news. It's not a newbuild anymore.

Now the mortgage. How much was it for? Over how many years? And what interest rate will it revert to after two years of interest only when it goes to repayment? Who is it with? How much did you pay for the flat and how much is it likely to be worth this summer (20% less than when you bought it perhaps?).

How much would it cost to rent a similar property?

Loads of questions, I know, but we need the answers if we are to offer sensible advice. Your income might also help.

GG

bubblepop_2

Flat was worth 118000 (this was off plan, they later sold them for 130000), mortgage for 92,000 - no idea of value now as it's all so over the place (they're refusing to sell the rest of the new builds for below asking price)
Actually had it slightly wrong - it goes onto 11 months variable, still interest only, on 6.75% in the summer and then onto repayments still on 6.75% It's with HSBC
Just really not sure what to do - shop around or stay put? Especially as I know it's likely I'll want to move sometime in 2010.
Thanks! x

dimbo61

Are you sure it goes onto 6.75% variable ( thats what it might say on the paperwork but HSBC variable rate might well have been 6.75% in summer 2007 and may be alot less right now)
You need to ring your mortgage lender and ask !
Also check what it would cost to go onto the repayment mortgage.
If you IO mortgage goes down then overpay for the next 11 months and hope the mortgage market picks up.

Gorgeous_George

I think HSBC's SVR is 3.94% so on IO the payments on a £92K mortgage will be £302.07. Repayment (over 22 years) are £521.61 per month.

I recommend you speak to your lender. Find out what they offer first.

If you don't want the flat, sell it as soon as early repayment charges are lifted (maybe even before if you think prices will fall further). Alternatively, if you want somewhere bigger, welcome to BTL .

GG

bubblepop_2

It says 6.75% on the paperwork - I assumed it would only change to new lower rates if I changed product and paid a fee (£600 in HSBC's case!)
Thanks for the advice though - apologies for my total lack of knowledge about mortgages - I've been an awful first time buyer and got the mortgage and just paid it as I would rent and tried to forget about the next step!!! Will definitely book in to see an advisor when it comes to 6 months before the rate ends. I pay £460 at the mo on a 35 (now 33) year rate at the moment so maybe I can even start repaying for the same or just a bit more than I pay now...
Thanks again!!!

Gorgeous_George

Normally, at the end of a deal, you go onto the lender's standard variable rate (SVR) (or base mortgage rate for Nationwide).

When you took the mortgage, the SVR would have been shown on the paperwork. It is used, for example, to help work out the APR. However, this is variable and at the moment it is at its lowest rate ever. A broker would be able to confirm but your lender should do so for free.

GG