Could we be any better off? Options?

cam101

Hi, I have tried phoning a couple of places but thought you guys on here could help more, so bear with me- here goes:

My partner and I bought our first house in August 2007, with a 100% mortgage. We were and still are able to afford the monthly repayments.

However with all the changes since then, and our inexperience of the mortgage market, we can't help but wonder if we could shape up our finances with regard to the mortgage.

The deal was a stepped interest rate for 3 years. From August 07-July 08 we paid £748 per month, at 5.99%. This year, until July, we are paying £847 at 6.99%. Next year, we will be paying around £900 a month on 7.49%. The deal ends in July 2010.

The house cost £133,000. Early repayment charges are £5,300.

As I say, we can afford to keep paying each month, and are not having any difficulties as such. We are both in secure jobs, and could just carry on and wait for July 2010. Is this the best thing to do?

I've seen Martin say that ditching and switching is not going to be worth it for most people- us included? I've seen things that say anyone with a higher than 90% LTV isn't worth touching in the mortgage companies point of view. True?

Sorry if you are more mortgage savvy and think we are lucky to be comfortable, but I money save in every other area (it's almost like a hobby to renegotiate insurances etc). I'd really like a clear answer whether you think we should/could do anything.

Thanks so much in advance, Cameron.

Squish_21

Have you tried the Ditch my fixed MSE calculator?

http://www.moneysavingexpert.com/mortgages/fixed-discount-mortgage-guide

_Andy_

At that LTV you won't be able to change lender.
I would hold out and see what your existing lender can offer when the rate ends.

p00hsticks

I'm not an expert, but from my understanding of the current climate, if you took out a 100% mortgage in 2007, then the chances are that you're in negative equity, and so you'd find it very difficult at present to find anyone who would be prepared to offer you a re-mortgage.

beecher

With an LTV higher than 90%, you've no chance of remortgaging I'm afraid.

Try your best to overpay as much as possible to get out of negative equity as your problem comes when interest rates climb upwards and you're stuck on the SVR.

cam101

Thanks that's pretty much the response I expected- technically speaking negative equity is probable, although an almost identical house round the corner sold for £1000 less than we paid for ours so I'm hoping it's not going to get too bad.

As we are okay and don't plan to move anytime soon, we can just stay put and keep paying until the climate is more suitable to people in our position.

The ditch/switch calculator says we would need a new deal at under 3% to make a saving. Given our LTV I'm guessing that's impossible!

Oh well, i'm off to read the "save on your grocery shop" board, maybe we will manage this more easily! :rotfl:

Leon_W

I would dearly like to know why you have a stepped fix !

Except in really REALLY exceptional cases I wouldn't touch one with a bargepole.

Robert_Sterling_3

You are likely to have negative equity.
Your ERC is such that you would need to reduce your monthly repayments by about £350 per month to break even assuming there were no other costs involved in the change.

Stick or Twist? Stick.