Re-mortgage on a RTB – Help!

RenStar

Hi,

Please bear with me because my story is rather long and a touch complicated but I read need some advice. I brought my council flat through the RTB almost two years ago because I felt it was my only real chance of getting on the property ladder. The flat’s in a small block and I was able to get a mortgage of £52K with the Abbey on a two year BOE tracker rate. At the time, I used a very good independent broker as I had some credit problems, about three or so defaults from my student days, all but one of which I had paid off and were marked as satisfied and one which I disputed but the company were refusing to send me the details of how I was supposed to have incurred the default. The default is still on my file but runs out in Feb 07. I stopped worrying about it because it didn’t seem to affect the mortgage I got although my broker asked me to write a letter explaining my situation at the time of taking out the mortgage.

The thing is, I am also getting married later this year and my fiancé and I have managed to save around £8K but still need another £7K towards costs for things that have been booked. At the time I took out my mortgage, my broker advised that at the end of the two year rate, I would be able to re-mortgage to release some equity to use as a deposit for another place. My plan was to re-mortgage the flat to release about £35K equity and rent it out for one year until we were out of the three-year tie-in period to the Council.

Last week, I phoned my broker to discuss putting this plan into action and was told that the rules have now changed. Apparently, mainstream lenders will now not let you re-mortgage properties that are still under obligation to the Council. This means I will have to wait till next year before I can do what I want to do this year unless I go with a non-mainstream lender where the rate is likely to be 7%+.

I phoned the Abbey to ask them what my options were and they said that if I needed less than £15K, I could ask for additional lending subject to my credit status. They are able to offer me a lifetime tracker deal at 1% over BOE base rate, 5.5% with £75 arrangement fee when my current deal ends this June. It’s slightly higher than the rate I’ve got now but they said it was the best deal for my situation as it gives me the option to sell the flat as soon as my tie-in period ends with the Council without any early redemption penalties. My problem is, I’m scared I will fail a credit check with the Abbey for the additional lending based on the one disputed default on my credit file and which was declared when I first got the mortgage. As a background, I’ve never missed or been behind on any of my payments for the mortgage. I also have a current account with them which was converted from a graduate account last year and I have paid back the £2K graduate o/d. I now have a £750 preferential o/d with them and a debit card/cheque guarantee card. I earn £35K pa and have been in my job for over three years. My only other credit commitment bar the mortgage and current account o/d is a catalogue account with £350 owing, on which my payments are up to date. Do you think I will be ok? I really don’t want to move the mortgage unless I need to but I’m not sure I will be able to get a personal loan either to cover the rest of the cost of the wedding if I’m refused. What should I do? Any advice appreciated and thanks in advance for the help.

davilown

Check your credit ratin - martin's got a few links for 30day free trials and they are good. If you want to pay the extra 5.99 you can see your credit score as well.

You'll probably see that you've nothing to worry about.

Also, get another opinion from another mortgage advisor with regards to a remortgage - there are some here who are good!

Well worth it!

:beer: monster

HelpWhereIcan

There is no reason why you will automatically fail for a further advance application with the Abbey - they can be reasonably flexible when something is 'historic' and has been satisfied. From what you have posted, the deal they have offered is competitive and the fact that there are no tie ins that means you will be able to sell/remortgage when your council pre emption period is over so would be a good solution.

Actually, the rules regarding the pre-emption period have not 'changed' AFAIK (other than it is now 5 years rather than 3, but this should not affect you).

The main problem with remortgaging during the pre-emption period is that the council's 'permission' is needed in the form of a 'deed of postponement' and this can be tricky.

However, there are lenders who will consider a re-mortgage in the council pre-emption period (generally by using what is called title insurance) and I would not expect the rate to be 7% plus, even with a 'non conforming' lender.

I can think of one who would has a 3 year tracker deal at 5.72% who will do up to 85% of the property's value. Obviously a 2nd choice (at best) after staying with the deal the Abbey have offered, but if the Abbey can't help, then...

The argument against could be the fact that in a year's time you will be able to choose any lender and will be able to repay the Abbey and any other borrowing then using a lower rate than the 5.72% I have quoted as an example.

The other option may be to look at a secured loan or personal loan as you have suggested.

As said before; if the Abbey can't help, have a word with another whole of market broker who can give you specific advice based on gathering all your circumstances, needs and objectives.

Hope this helps

RenStar

Thanks so much, HelpWhereIcan for the information and advice. I guess the only thing to do is to approach Abbey for the extra borrowing and see how that works out. If they say no, then I will certainly be talking again to a whole market broker and take it from there.

Thanks again.

stanmoresaver

RenStar wrote:

Thanks so much, HelpWhereIcan for the information and advice. I guess the only thing to do is to approach Abbey for the extra borrowing and see how that works out. If they say no, then I will certainly be talking again to a whole market broker and take it from there.

Thanks again.

Good Luck R/S.

Take some advice- keep a copy of everything you say and send to Abbey when looking at a further advance- They are (or should i say, my experience of their F/A administration is) attrocious.

SS