Mortgage product expires in July..but on 100% what do I do?

mrskpickles

Hi there

I have 100% mortgage, I bought my house in July 2007 and it was on a two year fixed deal. The rate at present is 8.04% I am with GE money Home Lending.

In July this year the product expires and the rate then goes to "3.6% above the barclays bank plc base rate" Is this the same as the bank of england base rate?

What happens if 3.6% above the barlcays base rate is lower than 8.04% will my payments go down or will they put them up somehow?

Also, I want to change my mortgage to get a better rate and deal, although it is 100%, interest only, and the house prices have gone down. I guess that means I will have to stay put for now? I do have 21k in unsecured debts, payments are all being met as is the mortgage, but is it likely a high street lender owuldn;t touch it?

Any advice please??

Thank you

Kirstie

Ian_Griffiths_Halifax

If you are at 100% Loan to Value Ratio you won't be able to move anywhere just now. Your rate will drop when your Fixed Rate ends, but you'll be on a variable rate which will rise at some time in the future, though it should be a couple of years at least before you go onto a similar rate to what you've been paying.

In the mean time you could either:

Pay any saving in outgoings off your unsecured debt - probably credit cards first as loans don't always allow overpayments.

Or

Make overpayments to your mortgage to reduce the Loan to Value Ratio. As we are likely to see a further drop in values before they start to rise again you could be wasting your money when reducing your unsecured debt may have a greater financial impact anyway.

If you do go for paying off the unsecured debt, look for the one with the highest interest rate and pay that one off first, don't try and pay a bit more to a few debts.

In the mean time, look for other areas where you might be able to cut down as well, such as getting a better deal on your Utilities and shopping etc.

mrskpickles

hi there,

thank you for your advice, I'll get cracking on the credit cards!

x

beecher

Your mortgage will be more than 100% now as prices will have gone down and you've paid none of the capital off. So you're in negative equity and may have to pay off a significant amount of capital to be able to get a deal in the future. 3.6% above base rates is high so try to sort things out before base rates rise again. You also need to work out a plan to pay back the capital in the future.

mrskpickles

just taken some advice, and think my plan is this.....

Stay with lender (no choice anyway) when i come off my product my interest only payment will come down significantly if rates stay pretty much as they are. At this poont change to repayment and get some of the capital paid off to decrease LTV. Payment will still be lower than it is now, so use that to pay off credit cards etc quicker.

Then (wishful thinking) in a couple of years hopefully wont be in neg equity and may be able to change to a more high streety lender and get a good deal, and then after that move house...fingers crossed!!!

Does that sound like a good plan or a ludicrous one?

payless

beecher wrote: »

. 3.6% above base rates is high.

lower than many mainstream lenders SVR though

http://news.bbc.co.uk/1/hi/business/7872344.stm

Fliss_M

but is it 3.6% above base rate or 3.6% above barclays bank plc base rate? Are they the same thing or does that mean 3.6% + barclays SVR?

System

mrskpickles wrote: »

Then (wishful thinking) in a couple of years hopefully wont be in neg equity and may be able to change to a more high streety lender and get a good deal, and then after that move house...fingers crossed!!!

Does that sound like a good plan or a ludicrous one?

It's pretty much the only plan you can have, I have the same plan

The problem will be if interest rates start rising faster than the property value and then we'll be paying so much that we can't afford to overpay the mortgage and the LTV will never reduce.

Fliss_M

Joeskeppi wrote: »

It's pretty much the only plan you can have, I have the same plan

The problem will be if interest rates start rising faster than the property value and then we'll be paying so much that we can't afford to overpay the mortgage and the LTV will never reduce.

Magic roundabout anybody? :rotfl: