100% Mortgage worries !

TheGingerNinja

Hi,

I'm new (ish)

In May 06 I took a 100% mortgage from NR.
The house I bought was worth £150k (new build).

The mortgage is made up of £143k interest only @ 6.19% and £7k reypayment again at 6.19%.

In July 07 we decided to borrow another £17k from NR to pay off debts etc.
This again is interest only but at 7.59%.

Without early repayment charges we owe £168k.

Our mortgage is not due for renewal for 2 years but allready we are a bit worried. The house next door was sold two months ago and although it valued at £165k the couple were forced to sell for £145 to get rid of it.

If when we come to renew we are negative equity.... what happens?
If I stay with NR will they only take into consideration the £143 mortgage ant not the secured loan?

Am I getting worried a bit too early ?

Thanks

HelpWhereIcan

TheGingerNinja wrote: »

If when we come to renew we are negative equity.... what happens?
If I stay with NR will they only take into consideration the £143 mortgage ant not the secured loan?

No, they will take into account the whole amount when working out what options (if any) they will offer you.

However, in theory you would be able to remortgage the secured part of the loan to another lender and leave the unsecured loan with Northern Rock (although they will increase the rate of your unsecured loan significantly).

TheGingerNinja wrote: »

Am I getting worried a bit too early ?

Thanks

Yes - no one knows for sure what will happen to the mortgage and property markets over the next 2 years.

No - now is the time to start planning and make sure that you have as many options as possible in 2 years time.

Make whatever overpayments you can to reduce the debt and improve your chances of having some kind of equity (if possible).

Make use of this site to moneysave where possible and get as much put towards your mortgage as possible (Get a Mortgage Pig).

You may find that you have no/few options and/or the climate at the time makes it cheaper to stay on Standard Variable Rate, but you should start to do things now that will give you the best possible chance of options in 2 years.