2 years until I have to re-mortgage

want2bmortgage3

I'm just over 3 years into a 5 year fixed northern rock mortgage. The loan is about £105k @ 4.89%. Monthly repayment is £644 with about 22 years left.

My income is about £17500 plus around another £500-1000 in bonuses/overtime. This works out about £1150-1200 a month net.

I initially got the mortgage through a broker and I am pretty sure my income was exagerated to obtain the loan. Although I did have a reasonable LTV (property worth £140-150k).

I'm worried in 2 years time I will still have a mortgage over £100k and will struggle to find a new mortgage deal. Should I be? If so, what can I do?

I have thought of a few ideas, such as:
-selling and buying a cheaper property (ie going from 2 to 1 bedroom as i dont currently use the 2nd bedroom)
-advertising for a lodger to bring in £300-350 extra a month but i'm not sure about living with a stranger
-spending on credit cards at 0% then using this credit to over-pay to reduce the mortgage balance, but would have to be careful to avoid running over and being charged interest

Any other ideas? I am being really tight with money at the moment, hardly using the car, not spending money on lunch, keeping bills to a minimum, but I'm not sure its enough.

Joe_Bloggs

The lodger Idea looks good. If a future tenant was a University student then there would be an obvious start to the tenancy and a natural end, you could chose to reject future enquiries at the end of the academic year to take control of your property.
J_B.

opinions4u

want2bmortgage3 wrote: »

2 years until I have to re-mortgage

No it isn't. It's 2 years until your fixed rate expires. While you may have the option of remortgaging at that time (or sooner, subject to payment of early repayment charge - ERC) you will also have the option of leaving your mortgage with Northern Rock on their SVR (standard variable rate) or any other deal that they have available at the time.

I initially got the mortgage through a broker and I am pretty sure my income was exagerated to obtain the loan. Although I did have a reasonable LTV (property worth £140-150k).

But you did know exactly what the payments would be. Those payments haven't changed. You knew what you were getting in to.

Why are you struggling more now compared to the previous 3 years?

I'm worried in 2 years time I will still have a mortgage over £100k and will struggle to find a new mortgage deal. Should I be?

Mortgages are harder to come by at the moment. The situation in 2 years - who knows?

-selling and buying a cheaper property (ie going from 2 to 1 bedroom as i dont currently use the 2nd bedroom)

An option. Although 1 bedroom properties are more difficult to sell later on. Northern Rock will also clobber you for an ERC.

-advertising for a lodger to bring in £300-350 extra a month but i'm not sure about living with a stranger

I suppose that depends how good looking she is . Seriously though, if you take this course of action you do need to get your lender's authority.

-spending on credit cards at 0% then using this credit to over-pay to reduce the mortgage balance, but would have to be careful to avoid running over and being charged interest

I have read this numerous times and don't understand how this will reduce your mortgage debt without shifting the debt on to credit cards and eventually paying 3% transfer fees all the time.

Look at every item of expenditure you have. Is it essential? Can it be got cheaper? Can you share items with somebody? Go shopping with somebody else and share the cost of any BOGOF offers!

Look at sites like www.valuedopinions.co.uk and start doing surveys to top up your income? Paper round? Part time bar job?

Thrugelmir

want2bmortgage3 wrote: »

I'm just over 3 years into a 5 year fixed northern rock mortgage. The loan is about £105k @ 4.89%. Monthly repayment is £644 with about 22 years left.

My income is about £17500 plus around another £500-1000 in bonuses/overtime. This works out about £1150-1200 a month net.

I initially got the mortgage through a broker and I am pretty sure my income was exagerated to obtain the loan. Although I did have a reasonable LTV (property worth £140-150k).

I'm worried in 2 years time I will still have a mortgage over £100k and will struggle to find a new mortgage deal. Should I be? If so, what can I do?

I have thought of a few ideas, such as:
-selling and buying a cheaper property (ie going from 2 to 1 bedroom as i dont currently use the 2nd bedroom)
-advertising for a lodger to bring in £300-350 extra a month but i'm not sure about living with a stranger
-spending on credit cards at 0% then using this credit to over-pay to reduce the mortgage balance, but would have to be careful to avoid running over and being charged interest

Any other ideas? I am being really tight with money at the moment, hardly using the car, not spending money on lunch, keeping bills to a minimum, but I'm not sure its enough.

Consider selling the property. As your finances are obviously extremely stretched. Also you may not get a cheaper mortgage at the end of your fixed term.

dimbo61

Your mortgage is about half your take home pay !
Welcome to the club, and start to look at what you spend the rest of your pay on each month.
Check out the goverments (Rent a room ) as you can earn up to 425/450 a month tax free and you should be allowed by your lender ( but check with them).
If you live in a university town/city contact them and ask!
You are doing well and could have a 75/60% LTV in 2 years just watch what you spend and forget the 0% credit cards.
GOOD LUCK

want2bmortgage3

do you mean selling then just renting or lodging?