Bank of Ireland remortgaging - 100% mortgage and negative equity. Help?!

Kage7

Hi all – hoping you can offer me some opinions.

I took out 100% mortgage 3 years ago with Bank of Ireland Mortgages with my stepfather as guarantor (I was in a commission based job). This was my first home and I was 21, told it was a great thing to do at such a young age (am now not so convinced!). I have always been able to pay my mortgage and have not needed any assistance from my guarantor.

Unfortunately I was on interest only as that was all I could afford at the time, and consequently have not paid off any of the capital. I am also in negative equity as the property value has dropped £10K.

I am really confused as to what to do now. I am in a secure job (public sector) and wanted to change to a repayment mortgage at the end of my fixed term, which is at the end of the month. However after speaking to 2 mortgage advisers, they have told me that other mortgage companies are not going to touch me and I will have to stick with Bank of Ireland. I am going to drop onto the Standard Variable rate for Bank of Ireland, which is fine for now, but I would really much rather have a fixed rate so that I don’t have the worry in future that my mortgage rates will rise month by month. One mortgage adviser advised me to pay interest only on the Standard Variable rate and put aside a sum each month to eventually pay some capital off so that I can then move to a different provider. However the worry of being on a Standard Variable rate is already getting to me, with interest rates predicted to rise.

What would you do? I have no savings unfortunately. I can’t afford to go onto repayment with Bank of Ireland currently. I am tempted to take up a fixed rate interest only deal similar to what I am currently on, it’s 5.19% though (when I spoke to them on 12th March) which seems quite high? ETA - they also would charge me a £600 arrangement fee. Can they do this when I am an existing customer?

Hope this isn’t too confusing – I find it rather confusing myself. Any thoughts appreciated.

maninthestreet

If you want to remortage with another lender, you will need to find £10K for the negative equity, plus a 10% deposit for the new mortgage. The Bank of Ireland are quite within their rights to charge an arrangement fee for moving your mortage from their SVR to a fixed rate, even if you are an existing customer.

Trying_to_be_good

Assuming the SVR allows unlimited overpayments, you could be overpaying at the moment without formally changing to a repayment mortgage.

The £600 arrangement fee includes the lender getting hold of the money at a rate they can lend to you for the fixed interest they'll charge you - it's not just filling in a couple of forms, unfortunately. This is cheap compared to some. And 5.19% fixed for your financial situation sounds a very good deal.

Good luck with whatever you choose.

dunstonh

they also would charge me a £600 arrangement fee. Can they do this when I am an existing customer?

Yes they can as you want to buy a new product. Someone may own a Panasonic TV but you dont get a free upgrade of Panasonic TVs for the rest of your life. You bought a mortgage deal in the past and you want to buy another mortgage deal now so you pay for it.

System

5.19% is a good deal considering you're in negative equitry, consider yourself lucky they offered you anything.

Kage7

Thanks Tryingtobegood and DunstonH (good analogy - makes sense!).

They have actually this afternoon offered me 4.99 fixed for 3 years with £500 arrangement fee, so I have decided to go for that

Relief! I was so stressed about it all.

englishdesi

Sorry to hijack this thread, I too am on a 100% Bank of Ireland mortgage which comes up for renewal in March 10. My mortgage is repayment.

What is likely to be my position when my deal ends in March 10 ?

Any help would be appreciated
Regards

Englishdesi

dunstonh

hat is likely to be my position when my deal ends in March 10 ?

The fact it was 100% at the start of the mortgage doesnt matter. Its what its at now. If you are still above 95% or in negative equity then you are in the hands of your existing lender and what deals they have on offer (unless you have the ability to repay a chunk off the mortgage to bring you into decent criteria.

System

englishdesi wrote: »

Sorry to hijack this thread, I too am on a 100% Bank of Ireland mortgage which comes up for renewal in March 10. My mortgage is repayment.

What is likely to be my position when my deal ends in March 10 ?

Any help would be appreciated
Regards

Englishdesi

Too early to say, come back in 8 months.

If you can afford to overpay, do so, it will help.

dimbo61

HI KAGE7,
What is the fixed rate you are on now ?
Is the new 5.19% fix cheaper?
If thats the best deal you can get in your current situation then take it and set up a standing order to overpay as much as you can afford / are allowed each month.
Hopefully at the end of this fix you will not be in negative equity so overpay on your interest only mortgage. GOOD LUCK

dimbo61

4.99% fixed for 3 years is great and only 1% more than the best deals on the market for people with 40% equity.
Just overpay for the next 3 years and reduce your debt.