Mortgage question

Feelingfoolish_3

Hi

If, once bankrupt, you can keep your home, do the mortgage companies tend to penalise you with the interest rate? For example, I'm on a fixed at the moment and it will end next year. If I get to keep my home then would my mortgage lender just give me the normally standard variable rate or would this be inflated due to BR?

Anyone have any experience or knowledge of this?

Many thanks

tigerfeet2006

All that will happen is you will go onto the mortgage co's normal rate.

Feelingfoolish_3

thanks tiger feet, also, would you be allowed to apply for another 'good' rate in the future do you know?

tigerfeet2006

You probably won't have a hope in hell's chance until your BR has dropped off your credit reference file. Though if the market picks up and things change it may be better. Though be aware that mortgage co's will have access to a register that will tell them you have been BR past the 6 years and if applying for another mortgage you have to tell them you are a discharged BR if they ask you at any time.

Feelingfoolish_3

gotcha thanks tiger feet, I'm just trying to decide if I want to keep the house or not, just want to be comfortable in the future and not juggling mortgage rates

thanks for your help x

peachyprice

It should say in your mortgage contract what will happen once your fixed tern ends, if it says it will revert to SVR, that is what should happen. You should only have difficulties if you apply for a new product.

Also do remember, you don't have to make this decision now, if when your fixed rate ends your mortgage company shafts you, you can walk away from the house without being liable for a penny of any shortfall.

A gamble worth taking?

HTH

Feelingfoolish_3

Thanks Peachy Price, I thought as much, Im concerned that if/when the interest rate rises I could be in a pickle and I just dont want to worry about debt again albeit a mortgage. I suppose I will decide when the house is valued. Ive had 3 estate agents around and even though they agreed that a realistic selling price would leave me with no equity, when 2 of them sent the paperwork they have put on a higher asking price which would give me equity and therefore I would need to raise this for the OR and I (obviously) havent got a few grand lying around :-)

Tinytim

Feelingfoolish, it is a bit of a grey area, as many of the lenders do not enforce their own terms and conditions when it comes to BR. My mortgage is with a member of the Halifax group, and the mortgage terms and conditions clearly state that in the event of BR, they have the right to remove any preferential rate (such as a fixed rate) and ask for full repayment. I was quite worried about this as I was lucky enough to have a very good tracker (0.45% above base) which still has a couple of years to go. To date nothing has happened, and I get the distinct impression that in many cases they are happy to ignore their own terms and conditions, preferring a mortgage which is being paid, to one on which they have to start taking expensive action, and possibly ending up with a substantial shortfall.

Depending on who your mortgage is with, you may get the option of switching rates at the end of the fixed rate without supplying any additional information. As long as you are not borrowing any more money, most lenders will simply switch you over (and charge the exhorbitant arrangement fee of course )