Question - Help Needed

Kath_T

Please forgive me if this is a really silly question - i know pretty much diddly squat about mortgages!

We recently (7 months ago) bought our new house and signed a mortgage with the Nationwide we have a fixed rate for 5 years at 6.58%, unfortunatley due to the 'credit crunch' both my husband and myself have had changes at work - i have just been made part time (was either that or full redundancy) and my husband has been taken off his shift pattern all in all even though we are still both working we are loosing just over £500 per month.

our mortgage payment is £716 pm and although we still on paper can afford this payment what we have left at the end of every month now equates to near enough £0.

i was wondering if it would be possible to swap our mortgage to something like a tracker - with the rate being so low at the moment and i am not daft i do realise that the rate will increase over time. the theory behind my question is if we can knock a couple of hundred off the current monthly mortgage payment for the short term to enable us to live and by the time the mortgage rates get back up to 6.5% we wouldn't be paying out childcare costs (currently £650 per month) the money we save on child care will go to the mortgage.

is this something that would be a possibility? or am i living with my head in the clouds?

any advice/information would be greatly appreciated.

koexelek

You could look at doing it, but nationwide will charge you a hefty penalty to come out of the fixed rate early

_Andy_

IIRC Nationwide won't allow you to do that (could be wrong).

opinions4u

If you have equity in your property, then you may be able to remortgage to another lender. But whatever early repayment charge is due will be payable.

But, as Andy says, I have read on these boards that Nationwide won't let you buy your way out of the deal and stay with them.

Ideally readers need to know:

- Your house value when you bought
- Your house value now
- The amount you owe
- The amount of the ERC Nationwide will aplly
- Your approximate annual incomes at the moment

Does the move to part time work help reduce child care costs? Or is that already factored in?

Kath_T

Thanks koexelek - i have had a look at all my paperwork and the early repayment fee seems to be £3500 approx, i was planning on adding it on to the new mortgage, i know it seems like a daft thing to do - we were/are planning on over paying as soon as the child care costs are no longer! this really is only for the short term, just to make life more comfortable now.

Thanks _Andy_ but surely nationwide would rather me move the mortgage rather than not be able to pay it and then end up on the long slippery slope to repossession? the fact that both my husband and my self (who were in what we though were secure jobs) have taken a pay cut has proven to us 'you never know whats round the corner', it only takes one of us to be made fully redundant and i fear we would be on that slope!!

beecher

Bit of a gamble to assume rates won't increase to 6.5%until you don't need child care anymore.

It might be worth your while coming out of your deal and moving elsewhere, but trackers which are available at the moment aren't very competitive. As has been said, already your LTV and your salary multiples as they are now are important as you need to know if a bank would take you on or not.

No matter what I'd advise going onto the Debt Free Wannabee forums for help in cutting back - ditching sky/gyms/car etc

whitewing

Vheck on https://www.entitledto.com to see if there is any help you could be getting now your wages have changed.