remortgage with negative equity

voddyman

Hi, I'm probably asking for the impossible here but I need sound advice for my Daughter and her boyfriend have just come to the end of their interest only fixed term mortgage and are now for the short term on the interest only standard variable rate with Cheltenham&Gloucester with whom they had their aforementioned original fixed interest rate mortgage.They originally just took the interest only option till they started to get on their feet with the intentions of getting a capital&interest mortgage at the end of their fixed term. The problem is that because of the fall in the house prices they are approximately £15k in negative equity.Is there any options for them out there as regards to getting another re mortgage or will they have to stay at the mercy of their original lender [Cheltenham&Gloucester] till their house price goes back up to its original level. Also take into account that they don't have any savings to put down a deposit with another company.
Any advice would be greatly appreciated to ease my worried old head. :beer::):)

beecher2

No option at all - they will only be paying a 2.5% rate at the moment so need to seriously overpay while they can. Get them to make out a Statement of Affairs and go through it, sorting out what they need and what they want - cancel Sky, gym membership, holidays, and try to get to a situation where they can go forward, and afford the capital.

Cannon_Fodder

Since the Fixed rate started they have presumably had some pay rises, as you say IO was designed to let them get on their feet, so being in negative equity doesn't really change that game plan.

Ok, they cannot Fix again for peace of mind, but they can go onto repayment and/or overpay to build up some equity on top of any gradual recovery in prices generally.

In a years time they can review their position. Make the most of 2.5%! It won't be around for ever.

voddyman

Ok, Thanks very much for your advice, I'll shall pass it on to my daughter and her boyfriend. :beer:

VIGILANT22

Now that they're on the svr they can pay as much as they want ...no need for interest only....they can make a serious dent in the mortgage now......

voddyman

Cheers Vigilant, Thet're gonna start over paying on their mortgage for as long as they can, then see what happens once the house prices go up and how much they've managed to overpay.:beer: