1st Oct payment 2.25% above Libor

dattasatta

Hello,

I have just rang my mortgage company to see what my payments will be after my fixed rate (6.16%) ends. They have told me that it will be 2.25% above the LIBOR rate. Should I remortgage now or wait a while.
We have not got the best credit history, but the past 2-3 yrs have been fine. We went to see a mortgage broker about a deal with Natwest but we were denied.
Our current house situation is this

73% loan to value
£91820 left on the mortgage
23 year term left
Currently paying £616 monthly
Annual Income £49000 (Hubbys wages-including overtime and bonus 2008-2009) that amount will increase by about £5000 this year

What do you guys think? My Husband wants to make overpayments so that we pay £700 a month ( thats including the mortgage payment ).
Is this a good idea?

Is this making sense, please tell me if you need more info
Thanks
Sarah x

figgles

You say 73% LTV, is that based on a current valuation or the valuation when you took out your mortgage (at a guess 2 years ago going of the 23 years left)? 2 years ago was roughly when property was at it's peak, so 73% then might be 100%+ now(!) in which case you are going to be stuck where you are.

If you can make overpayments though, it's advisable if you can as it will reduce your interest payments / term. Most important though, dont overpay too much and leave yourself short.

dattasatta

Thanks figgles,

The loan to value (73%) is based on the current valuation

figgles

Did you get a reason for the mortgage being declined? It could be credit rating, their assessment of affordability, or any number of other criteria they would look at.

Has your current lender not offered any other deals? Which lender is it? Some lenders will offer a new deal before the old one finishes, some put you on the SVR and wait for you to try to get a better deal.

For the moment though, as it's coming down to 2.75% your mortgage payments should be decreasing somewhat due to lower interest, now is a very very good time to overpay as much as possible (again, not leaving yourself short) and reducing the LTV further putting you in an even better position in the future.

dattasatta

She showed us the screen and it said Adverse Credit, so we are in the process of getting credit reports then we can see what's going on. We have a car loan and he has a credit builder visa card, but all are paid on time and in full. She said we may still be waiting for thing to "drop off" the credit reports??? We shall find out soon enough anyway

Is the LIBOR rate only 0.5%? Will our payments drop by a lot??

To be perfectly honest the whole thing is very confusing to us. I am glad this forum is here to shed some light on the whole thing.

Thanks again by the way:D

figgles

Ooops, sorry, Base Rates are .5%, Libor is currently about 1.27 so it will be about 3.52% or there abouts. Libor rates are still slowly decreasing too as they used to be around .1-.2% above Base Rates a while ago.

Rough figures for what you have listed above show a payment of roughly £630 a month at 6.16%, that will be down to about £492 at 3.52% so still better off. If you can overpay without penalty and you can afford more than £630, pay more than £630.

If it's adverse credit then it could be that you will have to wait a few years for things to improve for you, and the best deal you are likely to find is with your existing lender for the moment. Who is your current lender, and have you asked them about any other fixed rate deals?

dattasatta

The lender is JP MORGAN CHASE, they haven't sent through any details of fixed rate offers, and when I rang to speak to them no offer was made.
We can definitley afford to make over payments comfortably at the moment so thats what we are going to start doing.
Thanks for your replies:money: