Mortgage off fix in January - panicking won't get another

bexyboo1312

Hi
My husband has been with abbey for his mortgage for past 9 years now and when we moved 1.5 yrs ago, we ported over & borrowed the extra. One part is already off the fix (great as £50 less a month) and the other part is due off in January. We are paying about 7%interest on the fixed part at the moment, as we borroed 95%.
I am now panicking that come January, we will not be able to fix. I know fixing is not the best option @ the moment, cos of low interest rates but it should still be cheaper than we are paying now.

When we took the additional money over to port, the Financial Advisor @ Abbey basically fudged some figures and we borrowed £123k in my husbands name only. His earnings have now gone down & we are worrying that we could never borrow that amount again.
He earns about £22k the moment (was about £30k when we took the extra out) and i work p/time and earn £8600 PA. We have 2 kids
We have no problems affording our payment now, but I am worried we will be stuck when interest rates start to rise again
Any advise would be appreciated?

Thanks a lot :cool:

beecher

If you borrowed 95%, you're likely to be in negative equity right now so probably won't be able to remortgage. Who knows where we'll be by January, but if interest rates are still low you should overpay/save as much as you can in order to get your LTV down. You'd be best to start doing that now in fact - go over to the Debt Free Wannabee forums for help on how to save money from your household budget.

bexyboo1312

We have been valued and aren't in negative equity, but would get back just enough to cover the mortgage plus our fees to sell etc as we have done quite a lot of work to the house.
We also have debts - which are mostly on 0% cc at the moment and obviously i want to reduce those. im not sure if we could manage overpayments as well as trying to massively reduce our debts?

beecher

bexyboo1312 wrote: »

We have been valued and aren't in negative equity, but would get back just enough to cover the mortgage plus our fees to sell etc as we have done quite a lot of work to the house.
We also have debts - which are mostly on 0% cc at the moment and obviously i want to reduce those. im not sure if we could manage overpayments as well as trying to massively reduce our debts?

You'd need to a have a Loan to Value of less than 90% to get remortgage elsewhere. You'll just need to wait and see if Abbey will offer you anything nearer the time - you might be lucky and they give you a deal, or you may be on their SVR. I'd definitely go onto the Debt Free Wannabee forum for help in reducing your debts and then moving on to saving in order to be prepared for interest rate rises.

getmore4less

What is the follow on rate when you come off the fix in Jan?

If that is lower than the cuurent rate your payments go down

opinions4u

bexyboo1312 wrote: »

My husband has been with abbey for his mortgage for past 9 years now and when we moved 1.5 yrs ago, we ported over & borrowed the extra. One part is already off the fix (great as £50 less a month) and the other part is due off in January. We are paying about 7%interest on the fixed part at the moment, as we borroed 95%.
I am now panicking that come January, we will not be able to fix. I know fixing is not the best option @ the moment, cos of low interest rates but it should still be cheaper than we are paying now.

Worst scenario would be that you go on to Abbey's SVR at around the 4% mark. Use the funds saved to overpay.

When we took the additional money over to port, the Financial Advisor @ Abbey basically fudged some figures and we borrowed £123k in my husbands name only. His earnings have now gone down & we are worrying that we could never borrow that amount again.

If your husband knew the figures were fudge and signed the form he committed a criminal offence.

He earns about £22k the moment (was about £30k when we took the extra out) and i work p/time and earn £8600 PA. We have 2 kids
We have no problems affording our payment now, but I am worried we will be stuck when interest rates start to rise again

If Abbey's SVR goes up by 3% your payments will presumably be the same as they are now. You say you can afford this. If you overpay when the rates are lower you should be able to reduce the impact of higher rates in the future. Abbey may (or may not) also offer you a new fix in January.

With likely negative equity and insufficient income you have no choice but Abbey. That said, you can work that to your advantage if you choose to.