Advice& Help needed - remortgaging or not in July 2009?

sepinroth

Hi there,
Freshly registered but a frequent user of MSE (especially Martin's emails!) says hello to all

Let me describe my story in a bit of detail.
My partner and me bought our first house in July 2007 at our maximum possible price 125k with 97% mortgage from Halifax with fixed rate at 6.5%.
At that time it was a good offer for us, as we have been in the country for only 1.5 years (EU nationals) and with very average salaries.
Now, the deal comes to an end and what is the best offer of H? You guessed! No offer! OK, it is not as bad as it seems - at least not for a while. Thanks to the crisis and the end of our initial deal most likely our hefty mortgage rate will drop by 200GBP/month but with a tracker mortgage at 3.5% above the Bank of England.
(beecher is right : 3.5% Halixax SVR rate - thank you)

Obviously, not for long, even when I am an optimist:)

Now, can anyone explain me why today I was told that I still owe 121k after 2 years of regular payments - and the amount owed has almost not changed? Am I right thinking that it is to do with the repayment/interest amounts of our mortgage? I was clearly expecting a slightly lower debt...Any idea how to calculate how much would I be owing after certain period of time?

Ok, now to the point. Remortgage or not - that is the question, and even if yes (or maybe when the attractive rate will no longer be so attractive), then how to choose? The biggest problem at the moment would be the house value, so correct me if I am wrong - would it be good to get 2-3 valuations and then go to Halifax again? They claim our house has dropped 30k - but without valuation and even seeing the house (country average) which is ridiculous, because we have put lots of money and work in it. My careful estimate would be 130k.

POSITIVE SCENARIO:
IF our house is then worth as I think 130k, then am I right saying that we are 10k + (still owing 120k to H)?Sorry for the silly question, could that amount then be used as a deposit? (do not laugh please...) I am a complete newbie in this area and all I know it from MSE and just generally, reading the news.

Thank you very much for any thoughts.

beecher

You'll be unable to remortgage elsewhere unless your LTV is 90% or under, ie your house would have to be worth closer to £135k. Unlikely given that most houses are probably worth 15-20% less than they were when you bought, and considering it is more than your estimate.

What do Halifax value your house at? I thought they were giving new deals to people who were in negative equity as long as the LTV was lower than 110%

am confused by what you say about being on a tracker at 3.5% above the BoE rate. When your deal ends you'll go onto halifax's SVR, which is 3.5% at the moment so I wonder if you've got mixed up somewhere?

As for only paying 4k off your mortgage off, how long is the term of your mortgage? You pay more interest at the beginning of the term, so it sounds about right to me. There are calculators online where you can work out how much your payments impact on the outstanding mortgage.

sepinroth

beecher wrote: »

am confused by what you say about being on a tracker at 3.5% above the BoE rate. When your deal ends you'll go onto halifax's SVR, which is 3.5% at the moment so I wonder if you've got mixed up somewhere?

Yes, you are right, it will be 3.5% Halifax SVR - I have mentioned I am a newbie:)

beecher wrote: »

As for only paying 4k off your mortgage off, how long is the term of your mortgage? You pay more interest at the beginning of the term, so it sounds about right to me. There are calculators online where you can work out how much your payments impact on the outstanding mortgage.

The mortgage was for 32 years (30 now).
Thank you very much - much appreciated. I have no idea on what basis the Halifax values houses - I was told it is 'country's average decrease'.

beecher

Just remember that your house is unlikely to have bucked the national trend and increased to £135k. Your only option is to stay on the SVR. I'd advise getting rid of any debt and getting a plan together to overpay your mortgage in an attempt to get your SVR down. You could go to the Debt Free Wannabee forums for help on cutting down on other bills in order to fling as much money as possible at your mortgage. Make the most of the low SVR in order to be prepared when rates rise.

hoggums

When your loan was at 125K the annual interest you had to pay @ 6.5% was 8125 - so each month you were paying roughly £670 in interest. I don't know how much your monthly payments are but I guess they are not much more than that.

Now that your loan is at 121K your monthly interest charge is approx £650 - so £20 a month more is going towards paying the capital.

Sadly I don't see how you could reverse 17% falls (that's an expected £21,000 fall - you really added that much value?? ) and add 4K to your house without adding extra sq footage or rooms.

payless

as well as little capital being paid so far - the outstandig balance will also account for any added fees at outset - maybe arrangement fees and Higher Lending Charge ( Mig)

sepinroth

hoggums wrote: »

When your loan was at 125K the annual interest you had to pay @ 6.5% was 8125 - so each month you were paying roughly £670 in interest. I don't know how much your monthly payments are but I guess they are not much more than that.

Perfectly right, total monthly payment at 708GBP

hoggums wrote: »

Sadly I don't see how you could reverse 17% falls (that's an expected £21,000 fall - you really added that much value?? ) and add 4K to your house without adding extra sq footage or rooms.

I am aware of that but I also know how much the houses are sold for in our area (surprisingly, quite a few sold this year), so even if there is a fall in value, it will definitely be as big as Halifax states.

I am still not sure how is the interest/repayment calculated (any links?)

Thank you very much for all opinions