Paid mortgage for five years and now its 103%!!!

kimiom

Coming to the end of my fixed term so phoned my provider to find out what offers they had and was told my property has depreciated so much that I now have a 103% mortgage and cant get another fixed term - from anyone!:eek: I checked and, sure enough, they must have the same info on me as other providers said they wouldnt give me a mortgage, even variable. Is there anything I can do or do I just have to ride this out?

I am concerned that the interest rates will go up at the end of the year and I'll be paying more than ever. I'm with Nationwide who have offered me the variable rate until my property value goes up(if ever) or I can pay the shortfall!!!

opinions4u

kimiom wrote: »

Coming to the end of my fixed term so phoned my provider to find out what offers they had and was told my property has depreciated so much that I now have a 103% mortgage and cant get another fixed term - from anyone! I checked and, sure enough, they must have the same info on me as other providers said they wouldnt give me a mortgage, even variable. Is there anything I can do or do I just have to ride this out?

Ride it out. Hopefully you're on their 2.5% SVR which is dirt cheap.

I am concerned that the interest rates will go up at the end of the year and I'll be paying more than ever. I'm with Nationwide who have offered me the variable rate until my property value goes up(if ever) or I can pay the shortfall!!!

While mortgage debt doesn't fall massively in the first 5 years, it sounds like you might be on some sort of interest only mortgage.

Please can you post:

1) Your balance
2) Your previous interest rate
3) Your monthly payment
4) What type of mortgage you have (e.g. repayment, term etc)
5) What you paid for the property and when
6) What the current value appears to be

Regardless of this, you need to find a way to accelerate the debt reduction. Can you afford to pay more than the requested monthly payment? If so, you should look to do so. This will help improve you LTV from it's current 103% position.

luckyfool

The 103% ltv will be based on the lender's internal indexed valuation. This is often quite pessimistic so it might not be completely accurate.

I would look to maintain your payments at the current level or even increase them, and then keep them high once your rate reduces to 2.5% at the end of your deal. This will mean you can start chipping quickly away at your capital and will get you down to a low ltv as quickly as possible. Nationwide allow you to overpay up to £500 per month penalty free so you have plenty of leeway. They also ringfence these payments for the future so you can use them to underpay or take payment holidays if times get tough or rates really do go through the roof. This buffer might give you some time to sort other options out or sell without going into arrears if the mortgage became unaffordable in the future.

kimiom

Thank you for your advice. It's a great forum to get help from experts. You have given me the idea to overpay on my mortgage when it goes onto the variable rate in August. The shortfall is £6500 but, with one child and another one on the way, I need to keep that money on one side for maternity leave mortgage payments. Currently, my mortgage payments are £578 and I've been told I can expect them to go down to £450ish on variable so I will continue to pay my fixed rate from August. It's the best I can do - and pray that rates dont rise massively. Thanks again.