how do i get out of negative equity?

cupid_s

rover25 wrote: »

Cupid, that's a huge difference. Down from 66 to 22k. That's 44k over 2 years. How much were you's paying extra per month. Fair play to you's! :T

Thanks. I can't believe we've done it actually. Joining the MFi3 group here helped though.

We started off by saving £600 pm when we were students and we didn't have much spare money. As soon as our fixed rate ended we paid all our savings off but still kept the normal payments the same. We started regularly overpaying by £500 pm and just paying off whatever spare we had left in our account at the end of each quarter and we did this until I got a job. Now we're both working we're paying about £2200 a month off the mortgage (which is over 70% of our take home pay!)

adrian_bond

hi everyone,

in reply to my first post and to everyone on here; I just spoke to my bank (NPBS). I can overpay on my mortgage each financial year of 10% of the remaining debt MAX without penalty each financial year. Basically that means that this year (up till 26th April 2009) I can pay £9785 off extra before I get penalized. So from April 27th this year, I can pay £9785 total off OVER our £606 a month before I get charged extra. Obviously this isn’t going to happen unless I win the lottery so for now, if I were to pay off an extra £300 a month (from my extra weekend work, plus if I can afford any more), that would equal an extra £3600 a year off the capitol, not including the general (if only small) reduction in capitol from the regular payments. If I do this for two to three years (or until me and the missus have to move (become a family!!)) then we should hopefully build either a small amount of equity or at least tread water until the lending criteria is relaxed and the house prices return to a normal level similar to when we bought our place! (heres hoping!)

The guy at the bank said that the cash would automatically be used to pay off the capitol (amount owed, not interest) but if I want to make sure, then when im ready to start paying it back I can just pop in and instruct the assistant to take it off the capitol. Pretty simple really. He asked if I wanted to increase our direct debit there and then! I said no obviously as im not immediatley in that position yet as ive got to add all my savings to my ISA (about £2500 by end of march) to create my rainey day fund.

He was very positive about me and the missus paying our mortgage back early and was happy to help us cut all our costs (insurances etc) so we could afford our lifestyle whilst still paying back as much as possible (dont worry, i didnt buy any from him!). my impression (sorry to be niave but im only comparing this to Shatwest (my very weak bank) is that this is very different to normal banks who don’t want you to pay it back early but would rather extend your term to make payments easier! So positive all round I feel!

As a note; Currently, NPBS is only offering a max LTV of 85%. At the time we borrowed 95%, so basically, if we wanted to buy somewhere to live now, we couldn’t unless we had hypothetically approx £20000 saved to buy the same property! maybie its not all that bad then!

So there are plusses and minuses of it all at the mo, but hopefully in the long run it will pay dividends as the next rung in the ladder will be much closer, and we will have some actual equity in the place, which acts as a large deposit, so we don’t have to borrow much more cash!

gonna start the overpayments in april when i can stop saving and start using new cash to overpay. recon il start a diary on here to show my progress too.

please let me know your thoughts everyone as im keen to get this right, so any feedback or advise would be apprciated. thanks for all your support and keep up the good work!

pixiepie99

I think you'll find that at the moment all lenders are very keen for borrowers to overpay their mortgages if they can afford it.