Advised needed please

MrsWILLIAMSCASTLE

Hi im new to all this & i really hope some nice person can help, ill try to keep this short as poss

First time buyers purchased a house in june 2007 £125,000 with a Northen Rock together mortgage as we had no deposit,We was 20 and 21 with a new born baby & had no idea about anything,and took/done every things greens told us to! we purchased thro greens, used greens mortgage adviser & didnt shop around ect she didnt give us a option really it was just northen rock & thats it im not sure if any1 else was offering over 100% mortgages at the time, but thats all she offered us.

We are now out of the fixed term which was 5.99% and now paying 4.79% we have made lots of overpayments and spent alot of money doing the house up it was a dump when we purchased it.

So weve been to yorkshire bank for a remortgage and they sent a valuer around to value the property and he valued it at £120,000, gutted a 5,000 loss plus all the money we spent on it, but considering 2 houses have sold for £90k in the last 6 months im pleased at the value.

Ok we have completely paid off the loan side of the mortgage & we now owe £108,000.
the deal with yorkshire is 6.69% fixed for 5 yrs so its more than were paying now,but its the safe option which i prefer i dont really want a 2 yr deal & have to do this all again in 2 yrs .
Or do i wait im scared northen rock will put its rate up & (im a bit of a worrier) What if for some reason we go back into ression & the house loses value.

I really dont know what to do
Thanks in advance for any replys

Thrugelmir

You should feel proud of yourselves that you've cleared the "loan" and are now just left with the mortgage.

No one can predict future interest rate movements. So personally I would consider 2 options.

(a) Take the YB fixed 5 year mortgage term and know what your repayments are.
(b) Stay with NR on the floating rate and overpay your mortgage. On a £108k, 2.2% less interest per annum would mean you could overpay by £198 per month.

Its worth remembering that interest is actually calculated monthly. So by overpaying every month you are paying less interest monthly. The interest saved compounds and saves yet more interest.

MrsWILLIAMSCASTLE

Thank you so much for your reply Thrugelmir ,
I am going to search the net to see if i can find a slightly cheaper fixed rate for 5 yrs, if not i think i will take the YB just for peace of mind.
I also will see if/how long YB would hold the deal for so maybe i could get a extra month or so with NR on the lower rate.
If only i knew in 2007 how stressful having a mortgage is i think i would have stayed renting.

dimbo61

First on all WELL DONE on clearing £17,000 off your debts over the last 2 1/2 years.
House values will go up we hope and you have improved the property.
I have just looked on the Yorkshire building society website at there 5 year fix 85% LTV its 5.69% so less than what you are paying now.
I would stay on the SVR and overpay every penny you can afford over the next 12/18 months and try to bring the LTV down to 85% while keeping an eye on interest rates and jumping onto a fix when rates start to rise GOOD LUCK

MrsWILLIAMSCASTLE

Thank you for your reply Dimbo61,

Ok after reading your reply I got slightly confused in thinking Yorkshire Bank and Yorkshire Building Society were the same company & after speaking to Yorkshire Bank then quickly realised my mistake as they dont offer a 85% LTV, which is a shame as I think if we really tryed we could possibly knock the mortgage down some more, they have already valued it & have all our details, would save going thro all that process again.

I do have some savings which I could pay off the mortgage which was hoping to do the garden up this summer for the children but if I go for the 85% then I can say goodbye to that idea. So I can get my mortgage down to £105,000 which leaves me £3k short for the 85% I think if I try really hard I could clear it down to £102,000 by end of May.
However im worried that by May the rates may have gone up & this offer wont still be around 5.69% fixed 5 yr ,im also worried as Yorkshire bank had the house valued & that came back at £120,000 what if when Yorkshire Building Society send the valuer round he says its worth less??Can this sort of thing happen? The reason i ask is we had it valued around 8months ago by Lloyds who said it was worth £115,000 & altho we have done more home inprovements since im not sure if values vary?

So heres where i am

Yorkshire Bank valued it at £120,000 & can give me a fixed 5 yr @ 6.69% and they want to know asap if we want to go ahead as the special offer ends end of feb (this is £500 off the arrangement fee)

I have since found Northern Bank 90% fixed 5 yr 6.29% We have phoned them & still waiting for a call back.

or Yorkshire Building Society 85% 5yr fixed 5.69% but we wouldnt be able to apply untill earliest May and im not sure if that rate will still be the same them or if the value may come back less.

Oh ill be glad when were mortgage free

Thank you again for both your replys

Thrugelmir

While rates may not rise. House prices may fall.

Trying to forecast future events is nigh impossible.

Best to focus on matters you do actually have control over!

dimbo61

As somone on a fix I think you need to hold you nerve for a while.
The bank of England have not increased the base rate for the last 16 months and with an election in may or june are unlikely to do so.
I would stick on the svr with NR and overpay like you have been over the last 2 1/2 years there will be good 5 year deals for some time to come ( I HOPE !)

Rob71

MrsWILLIAMSCASTLE wrote: »

... I can get my mortgage down to £105,000 which leaves me £3k short for the 85% I think if I try really hard I could clear it down to £102,000 by end of May.

However im worried that by May the rates may have gone up & this offer wont still be around...

You will get a better rate and have more options if you can manage this by May.

No one can predict interest rates and which mortgages will be available, but it is a very safe bet that nothing is going to happen with interest rates for the next couple of months - what's less certain is what will happen in, say, 6 months; even then it's likely that interest rates won't have risen.

Don't feel pressured to do anything at the moment - just pay down what you can.

When May/June comes around, see a whole of mortgage broker and get the best possible deal you can at that time.