should I?

ziggy27

just wanting some impartial opinions really, my mortgage is for £85000 and I am tied in for four years until march 2012, however i am currently newly single mother of two and student and am enevitably experiencing some financial difficulties. I have had my problems in the past with money when i was younger, which resulted in a poor credit rating and hence my mortgage provider set a rate of 7.44% on my interest only £85000 mortgage. my payments are currently £520 per month and I do make every payment on time. I am considering buying out of my fixed rate (£5000 penalty) and possible taking my mortgage to £100000 to take advantage of the low interest rate at the moment. my mortgage provider said if I do this they will track at 2.96% above the barclays base rate . I figured at this rate I could take the £100000 and change from interest only to capital repayment and still pay less than I am currently paying. for me to lose money the base rate would have to rise to almost 5%. I wish to take out £100000 to clear outstanding credit I have from way back in my teens in the hope this will boost my credit rating and in a few years I will be able to get a mortgage from a better source. Any advice would be great thanks.

poppy10_2

ziggy27 wrote: »

for me to lose money the base rate would have to rise to almost 5%.

The average base rate in the long-term has been higher than this, and with inflation surging the chances of an interest rate hike are higher than ever. Your plan looks like a recipe for financial suicide.

Caz3121

do you have an income that will support a £100k mortgage, what is the LTV?

ziggy27

I am a student and will be for the next 2 years, so at the minute I have been claiming through student finance (although not from the bank) to pay my household bills, which i will have to pay back once my studies are complete. my average income per month is around £2300 whilst my expenditure is around £1950. As mentioned I have two Children and money is tight at the moment. I think I just wanted to make the most of the low interest rates at the moment, although it is inevitable they will rise!
And I have just had my house valued at around £12000 to £125000

Cannon_Fodder

It will take a year to make up for the £5k exit fee, by which time your tracker could be at 5% and rising...

Your current mortgage is £520 a month, so you need to look at what you are spending the rest of £1950 on...there appears to be room for economies.

ziggy27

Thanks I appreciate your Advice, No room For Cost cutting anywhere in my Budget, My Mortgage is 520, and I Pay 800 for my two children's day care fees whilst I work and attend university. thats without gas, electric water, etc,etc. I do think perhaps its a little too risky for me to meddle with my mortgage like I said I have made the payments so far so probably best to stick with the current interest rates at least whilst i am a student. thanks all. any other advice would be great though!