remortgaging half way through a fixed rate?

tbourner

We got a together loan from Northern Rock 3 years ago, on a 5 year fixed rate, but due to now deciding to pay off our HUGE unsecured debts we're thinking about going onto an interest only mortgage.

We're paying 5.99% at the moment, £114k owing (roughly), with a £29k unsecured amount at the same rate with NR. Have I got any chance of remortgaging onto a cheaper interest only setup? Either with NR or someone else?

We have no idea how much the house is worth, but it's not much. We bought it for £122k 3 years ago, so it may be worth £135k now if we're lucky! It may even be less than the mortgage for all we know!!

I know they charge to cancel early, but is anyone likely to give us a mortgage now?

GSXRCarlos

you're basically askings for a mortgage of £145,000?

ess0two

3 yrs ago 122k,very optimistic it'll be worth 135k now.

RufusA

I hate to say this is your brought 3 years ago, it is likely your house has fallen in value by 5 - 10% since buying! It does depend a bit on where you are in the country and the exact dates. The Nationwide site may give you a good starting point for calculating present value:

http://www.nationwide.co.uk/hpi/calculator.asp

Given your lender is Northern Rock, who are not being the most sympathetic at present, I think it is unlikely they will entertain you moving interest only unless there are exceptional circumstances (i.e. redundancy). And with a high LTV, and high debt it's going to be impossible to move to another mortgage provider (IMHO).

I'd suggest asking on the debt free want to be board for ideas on how to reduce your unsecured debt other than remortgaging!

HTH - Rufus.

_Andy_

1) Unlikely to be worth taking the hit with the ERCs and new fees
2) At that LTV unlikely to find many deals
3) Interest only at that LTV - not going to happen.

tbourner

What's LTV?

Sorry what I meant was we'd be lucky to get £135k for it, like that's the total maximum, and I think it's probably at about break even, but it may even be less than that for all we know. If I were to guess I'd say it's worth about £120k now, but I haven't really looked into it, I know they went up in our area by about 14% in the first 18 months of us having it, and I don't know how much they've dropped since then.

Anyway, not a good idea then. I'm doing some budgets and stuff to put in the debt free wannabe section, but I'm also trying to get some ideas before I go in there cos they'll likely suggest some of these things anyway.

_Andy_

LTV = loan to value, how much you owe versus how much it's worth.

BigDave81

If I'm reading it correctly you will be looking to combine the outstanding mortgage and your loan to a new mortgage deal which would be £143k total?

If the house was £122k 3 years ago then it's probably around the same or less so there won't be any company that will give you a mortgage over £20k more than the value of the property?!?!?

Plus it will probably cost you a few grand to cancel the fixed deal and around another grand to get a new deal.

Forgive me if I am completely wrong here but this is what it seemed to me.

b0rker

The £29K unsecured is a bit of a problem for you guys at the moment and will be even more of a problem in 2 years time if you want to secure a new fixed rate.

You are snookered right now as you have no options but to stay on your 5.99 fixed as far as I can see.

But the £29K is WAY more of a concern.

I am not sure that overpaying over the next 2 years would be the best idea as I am not sure if that would be reducing your unsecured debt and your mortgage when really what needs paid down is the unsecured loan. Then again is you pay down the unsecured loan you will be left with the mortgage at a high LTV and therefore find it hard to secure another deal in 2 years time.

In truth you really need a cash injection of about £30K... Now or in 2 years time.

And who knows what house prices will be like in 2 years time so?!?!?

tbourner

BigDave81 wrote: »

If I'm reading it correctly you will be looking to combine the outstanding mortgage and your loan to a new mortgage deal which would be £143k total?

No I was really asking if there was any way of keeping the unsecured loan with NR as a seperate loan and just changing the secured bit of mortgage for a new deal or changing to someone else. I don't want to add that loan onto the mortgage.
b0rk why is it a problem? Surely if we stay with the Rock in 2 years the mortgage will just carry on as it is? And depending on the rates at that time we'll either pay more or less? I was only asking if I could change it seperately to the unsecured loan but I don't know how the together deal worked and if they can be split or not.

_Andy_

If you remortgage to another company the unsecured loan rate will increase dramatically.