Remortgaging advice - raising some equity

MascaraMinx

This is a tangent from the Northern Rock thread.... I'm throwing a few ideas around as to how to get away from Northern Rock to another lender and wondered if anyone can give me constructive advice.

My husband and I have a Northern Rock mortgage currently on SVR and have no equity in my house, in fact, it may even be in negative equity by a couple of thousand, would need to get it valued to be certain.

I've seen a decent mortgage with the Post Office which requires 20% deposit, fixed for 3 years. Interest only payments on this mortgage would leave us with approx £600 to spare above what we are paying now. I'm thinking if I could raise the 20% via other means of credit (loans I am alway being offered by my bank, credit cards which I could borrow from at very low interest), I could make the interest only mortgage repayments and pay the credit off with the difference.

I know this is contraversial, and I'm sure people will think I'm mad, but I'm thinking it's better than the SVR suddenly shooting up and paying hundreds each month for nothing....

Would I even get a mortgage with PO if I had loads of personal debt? I'm thinking not....

Cannon_Fodder

You are correct with your last sentence.

dimbo61

You need to save up money and overpay the mortgage as well

MascaraMinx

We are currently making overpayments while the SVR is so low. My concern is getting away from NR onto a fixed before the SVR shoots up. I know it may sound crazy, but so is paying hundreds in interest when it increases.....

Thrugelmir

MascaraMinx wrote: »

We are currently making overpayments while the SVR is so low. My concern is getting away from NR onto a fixed before the SVR shoots up. I know it may sound crazy, but so is paying hundreds in interest when it increases.....

Stick with paying down your existing mortgage as fast as you can.

This will enable you to remortgage at some point.

Any debts you have will come to light on any mortgage application you make so my suggestion is don't muddy your credit history.

MascaraMinx

I know you're right, once I'd typed it out it sounded even crazier. Overpay and cross fingers rates don't rise too fast :S

kataklysm

Yep, sounds like an extremely risky strategy just to save a few pounds. Keep overpaying and also work on saving a good sized buffer to protect against any future rises. I know it sucks to be on an SVR with no equity (I'm with Accord...) but unless you're in a hurry to move, there's no reason to put yourselves at unnecessary risk.

This site will help you calculate your savings as a result of overpaying, you'll probably find that in 3 - 5 yrs you'd be in the same position as if you'd taken out a loan: http://www.thismuchiknow.co.uk/?p=42

Thrugelmir

MascaraMinx wrote: »

I know you're right, once I'd typed it out it sounded even crazier. Overpay and cross fingers rates don't rise too fast :S

Its amazing what can be achieved with a concentration of effort. At least you are going the right way about tacking the issue. Spend some time on the Money saving boards rather than worry directly about the mortgage.