Income fallen, are we tied to current lender?

yamin

Hi

We took out our mortgage before I stopped working to be at home with the children. We are currently (thankfully!) on SVR at Bristol and West, but are keeping an eye to our future possibilities.

Our mortgage is 90%, interest only and has 22 years to go. Only been in this house for 3 years so assuming there won't be much change in its value, though don't think its lost any due to improvements.

My question

Since our income x 3 is still £150k short of the mortgage we have, there is no way we will be able to shop around for another mortgage is there? Despite complete and ongoing trouble free payments? Pretty sure I know the answer, but just checking! We're talking for better rates here, not self cert or anything that involves higher rates.

Thanks

JA1000

Your income x3 is still £150k short of the mortgage, sounds like a big mortgage.

Annisele

Is the £150k a typo? It does suggest an astonishingly large mortgage. I don't think we can say much unless you tell us your total household income.

If 3x income is, say, £850k and your mortgage is £1mil, then maybe. If 3x income is £150k and your mortgage is £300k, then I'd say you have no chance of getting a new mortgage from a different lender.

Do you have any plans for repaying the capital?

opinions4u

yamin wrote: »

We took out our mortgage before I stopped working to be at home with the children. We are currently (thankfully!) on SVR at Bristol and West, but are keeping an eye to our future possibilities.

To help posters get a proper perspective, what is their SVR? I thoguht it was near 5%, but it would be useful if you could clarify.

Our mortgage is 90%, interest only and has 22 years to go.

The 90% LTV will significantly limit your remortgage options and, I would guess, leave you with a higher rate should you choose to remortgage.

Why are you on interest only? What are your plans to repay the debt in the future?

Only been in this house for 3 years so assuming there won't be much change in its value, though don't think its lost any due to improvements.

It depends. A householder's "improvements" are often seen as maintentance by a valuer so may not enhance value - merely stop it falling.

Accoring to this handy Nationwide tool UK house prices have fallen by 6% over the last 3 years. So what improvements have you actually done?

Since our income x 3 is still £150k short of the mortgage we have, there is no way we will be able to shop around for another mortgage is there?

The shopping around isn't the problem. You can shop until you drop. You just might not be able to buy.

To be honest, you haven't provided enough information to allow other posters to respond clearly.

- what incomes do you have?
- how much is the property worth?
- how much do you owe?

Despite complete and ongoing trouble free payments?

You are on interest only. Ask yourself if you really are paying "complete" payments. Or are you storing up a mass of expense for the future?

Pretty sure I know the answer, but just checking! We're talking for better rates here, not self cert or anything that involves higher rates.

On the limited information that you have provided I think you have the following problems:

1) Insufficient income
2) Insufficieent equity to either get a remortgage, or to obtain a remortgage at a rate lower than you are currently paying
3) A shortage of lenders who will give any consideration to allowing you to have an interest only loan, so if you do succeed in remortgaging your payments will rise anyway (although you do need to bite the bullet at some point in time, sooner rather than later, and get off interest only).

yamin

thanks for all these helpful replies. you are all pretty much saying what i expected. didn't give loads detail out in first post because didn't want to bang on about stuff that isn't actually relevant to my question, so didn't want to wander from the point, but since you ask

1. Mortgage is £241k - glad not £1m!!
2. The income x 3 is £90k to £110k, depending on unsocial hours worked (NHS Senior nurse)
3. We got the mortgage because I was in a much higher paid job (Not more skilled, but private commerce, go figure!!)
4. Interest only. More than well aware of disadvantages/costs/future payback plans, but in order for our life to be immeasurably improved we took decision to lose my salary. To some that may seem mad, to us it is completely worth the stress puts on our income, and I am able to go back to something if the wotsit hits the fan! We will go back to repayment but its not an option at the mo. As I say, well aware of consequences and costs of decision we've taken, but we have thought about it and discussed it and this is not really up for change at the mo.
5. SVR at 2.5%, so don't want to fix just yet but keeping a close eye - this recession happy for us!
6. An undiscovered leak last year has meant a complete new kitchen, floor, walls, units and all, £25k worth, and since new, clean and simple lines, figure that this represents an improvement to the value of the house, though in current climate just an aid to hold value where it was.Also, bought house for a song 3 years ago as needed LOTS cosmetic work, the rest being done and the kitchen being the last of a bad lot! Againl, doesn't really matter as prob no RISE in value so we can't use to lever a better mortgage. Bought house for £265k.

Hope that answers all/some of the queries.

Thanks again

beecher2

You're without doubt tied to your current lender as your salary multiple is an eyewatering 8 times salary. Each 1% base rate rise is going to cost a lot more for you with that size of mortgage - what is your plan for when they rise?

Also, are you confident your lender will allow you to remain on interest only with no repayment vehicle?

And, have you asked them if they have any deals for you (just so as you know the likelihood of them offering you a new deal when rates increase). You may well be close to negative equity as the new kitchen and other cosmetic alterations aren't going to add much to the value.

dunstonh

The other problem is not just your income but the fact you are on interest only. You are unlikely to get an interest only mortgage again elsewhere.

Given the large amount borrowed over your income and the fact it is interest only, you are in serious debt trouble. You need to see that sooner rather than later.

i recommend you pop into the debt free wannabee board to get some advice on how to deal with your debts. Dont keep putting it off as each month delayed is one month less you can spread the problem over.

It may be worth speaking with the lender to see if you can adjust the term back to 30 years or whatever and go repayment basis so at least you build some certainty there.

yamin

OK guys

I am sorry if I misled anyone, but at no stage did I express worry or ask for help re debt.
My question was simply that I wondered if any other lender would consider us. You have all confirmed my thought that they wouldn't.
I did NOT ask for advice or indeed judgement about 'serious debt'. Yes we have a large mortgage, but we are perfectly happy with how we are managing that debt. We are intelligent and money aware people, even if our choices are different to yours. I have a normal earning potential and ability but it suits us right now for me to be at home. We are perfectly able to meet our mortgage payments, and I never at any time said we do NOT have a plan to repay the balance, or indeed that we don't have financial planning in place for interest rises etc. If I was worried about this I would have asked for help on that aspect. What I was trying to say politely was that that was not the question and was, frankly, no business of anyones if we are not struggling or complaining about it. I appreciate the confirmation of the answer to the original question, but despite saying twice that I didn't need help or advice on the interest only thing, I have been thoroughly lectured, and I didn't ask for that!

Clearly I misunderstood when I thought that I could just get an answer to a question and not have my financial washing thoroughly hung out for all to see, even though I made it clear that we are happy with our decision, my mistake.

Thanks anyway

beecher2

yamin wrote: »

OK guys

I am sorry if I misled anyone, but at no stage did I express worry or ask for help re debt.

Those who haven't had their lightbulb moment often don't worry or ask for help. Sorry if it seems like lecturing, but anyone reading this thread will have alarms going off.

yamin

Please don't patronise me. You sound like a born again Christian telling people that the only reason they are happy with their 'non-christian' life is that they have not had that lightbulb moment of 'seeing Christ'. There is no reply anyone can make - you protect yourself by telling people 'they just haven't seen the light'. You do not know me, you do not know how many hours we have spent going through finances and planning for the future. Your reply comes across as patronising and self righteous, and does not encourage anyone to ask for help or straightforward advice. As I have said, several times, our financial decision may be way higher on the risk scale than you are prepared to sit, but that doesn't make it WRONG, just different. So long as we have a 'fall back plan', then having been told that, you should not feel you have the right to lecture me! Again, I asked for a simple confirmation of what I already knew, not an appraisal of my financial decisions.

getmore4less

3* income is £90-£110k so £30k-£36600 take home £1850-£2400

£240k @ 2.5% £500pm

Looks managable up to around 7.5% at the top end of income with spends under tight control.

Still a long term issue repaying the debt.