Mortgage advice needed" where can i go?

shanouck

I had an endowment mortgage, and as i was facing a shortfall i contacted my morgage lender and asked them if i can change to a repayment mortage - as i heard this was a right thing to do and it would pay off a majority of the outstanding mortage.

They have sent me a form asking me which vehicle do i want to change to?
1. Transfer to interest only repayment
2. Transfer to part interest only and part repayment method
3. Transfer to capital and interest repayment method


And that my new quote which lasts a month is approximately is £477 a month. (i could afford this amount a month if i was to get another job..but if it went higher i may get in trouble re-paying it. Its a big leap and a shock as i am paying only £200 a month.

I need to do somthing now-in order to make sure the mortgage that i owe is being reduced, i was thinking of getting the capital and interest repayment method-but i am confused and would like some advice about it all before i change.. Like how would this effect me if the interest rate went up? Is this the right thing to do or not? What else could i look at doing? I just dont know it says seek advice on the letter before i change, but where do i go for advice? I have tried looking on the internet for advice and all i can find with the answers to my questions is a remortgage?
I have been here before and you good people have always offered me good advice so here i am agian hoping some one can help me"..
And i am not sure if i should go down that route or not - as i have heard it takes longer to repay the mortgage and cost more"
If any one can offer me advice out there on the right route to take i would very gratefull.

airchie

I think one solution may be to take an interest only mortgage, but try to very strict with yourself and save as much as you can on top and pay off chunks.

that should keep your minimum payments low should you be short one month but also allow you to pay off more if you get any cash through you weren't expecting or that 2nd job.

I'm far from an expert though so I'd definately wait for some more qualified advice before taking the plunge...

Mrs_Bumble

Are you still paying your endowment?

What is the estimated shortfall?

Estimated payout at present?

Remaining term of endowment?

What is your mortgage balance?

What is the remaining term of your mortgage?

What is the current interest rate on your mortgage product and how much longer does it have to run?

shanouck

Hi Mrs Bumble,
No i am not still paying the endowment,
There is £35,000 left on my mortgage and i have 8 years left to pay off the mortgage.

Mrs_Bumble

and the answers to the other questions lol!

shanouck

Sorry i should make my self more clear - and answer them all,
Question 1 NO
Question 2 £35,000
Question 3 None that i know ov.
Question 4 8 yrs
Question 5 £35,000
Question 6 8 yrs
Question 7 Not sure of at the moment as i only get a statment once a yr. But it is quite high over 7%

So as above :- No i am not still paying the endowment,
There is £35,000 left on my mortgage and i have 8 years left to pay off the mortgage.

dunstonh

No i am not still paying the endowment,

What happened to it?

Mrs_Bumble

In you first post you say that you contacted your lender because of a shortfall in an endowment. Now that implies that you have been notified of the value of the endowment and how much it is running short by.

So you say that you are not still paying the endowment and there is no value that you know of and so I am confused?

If there is a shortfall then there is a value and that makes a difference in what advice to give in relation to the options for your mortgage, can you explain please.

Why is the interest rate on your mortgage so high?

Mrs_Bumble

Oh and how old are you?

shanouck

I am 40 yrs old,
No i have not been notified of the shortfall in the endowment policy, i have had no contact with them at all since me and my x took it out, and he was supposed to ov paid it... (I assume there is a shortfall as my x never paid into it long enough)----my x some time ago cancelled it..So it has not been paid for years and i do not know if the place we had it still exsits as it was not taken out with the lender we have the mortgage with. There may be some value? to it i do not know.
I do not know why the interest rate is so high either - ?? Only my mortgage company can answer that...

Mrs_Bumble

Its not a shortfall if it has been cancelled. If he only cancelled it then it may well still have a small value but that will be up to your ex and you to sort out.

In answer to your original question then it would appear that if you want the assurance that your mortgage is going to be repaid at the end of its term then you need to switch to your option 3, Captial and interest repayment method.

The reason the monthly payments jumped up so high is that your mortgage term is only 8 years and therefore the monthly payments have to be enough to have paid the mortgage balance in that time.

As you are only 40 then you could ask the lender to extend the term so that the monthly payments are not too high.

Is your current mortgage product within a tie in period or can you shop around for a better deal?

You need to ask them why the interest rate is so high.

If you are in a fixed rate period then just ask them to extend your term and switch to your option 3, keeping in mind that if you extend the term by too much you will pay more interest to the lender, keep the term as short as you can afford that way you won't pay too much in interest.

Alternatively if you not in a tied in product at the moment then shop around for a better deal and you could then incorporate the capital and interest repayment and extend the term in that or speak to an independent broker about getting a better deal and your options.