Advice required please

lawrie7062

When I was retired (due to illness) from my job in 2008, I wanted to fix my mortgage rate for some security so fixed it for 5 years (Doh!!!).
Rates have obviously plummetted since then so I contacted my MTG provider to see if I could change my MTG product. It turns out I can do this in June but need to pay an ERC of almost £7500 but i'd either be saving £400 p/m or reducing my mortgage by 6 years.
The only problem is that to add the £7,500 to the mortgage, I would have to be re-assessed for affordability (which on DLA, i'm not going to qualify) so my only other option is to take out a loan to cover it. My credit score is "Fair" but don't know what loan options/companies i'm best to try. I've looked at Credit Union loans but don't really know how they work or how they are assessed.
Any help is appreciated.
Thanks in advance.:cool:

[Deleted User]

at what rate did you fix?
keep in mind that rates will start to rise later this year
as for credit unions you have to save for at least six months before you can borrow and i doubt many would lend that sort of money long term,seems to me it would be cheaper all round to stick as you are now for the last 2 years of your fixed rate then see what happens

lawrie7062

7.39%:eek: Whereas if I changed, it would drop to 4.39% fixed for 3 years. At that time we're looking to sell the house as my wife will have finished her nursing degree and we're looking to move to Aus/NZ.

I feel bad for posting on this board as we're in a pretty good position overall with about £100k in equity so realise that there are people who are far worse off than I am but it's just frustrating that we could save £400 p/m or reduce the mortgage term so significantly (from 20y to 15y) but can't fund the £7500, or add it to the mortgage capital (which would have been my last resort anyway).

I think i'm just being fuelled by my health worries (i've had cancer 10 times now) so want to make sure my family orders are in a good position if anything should happen to me.

Edit: it was a 5 year fixed taken out in Jan 09 so we've still got 3 years on the 7.39%

redpete

lawrie7062 wrote: »

I feel bad for posting on this board as we're in a pretty good position overall with about £100k in equity so realise that there are people who are far worse off than I am

Don't worry, this site is to help anyone save money, not just those in dire financial straits.

lawrie7062

Thanks Redpete. Being new to the forum, I didn't want to stand on any toes.:beer:

lawrie7062

The reason that i'd like to be £400 better off per month is that I also have an Egg credit card with a balance of £2000 but the interest rate has steadily increased over the years and is now at 29.9% so I need to work on getting that cleared asap as my repayments aren't really impacting on the capital.

Thanks for your help, advice and comments so far. It's appreciated.

dantheman2010

Just a quick point is that if you were to save about £400 per month by the reduction of the mortgage you would still have a £7500 loan that will need paying off.

If you decided to pay that off over the 3 year fixed period you are still going to be looking at paying around £230.00 per month for the loan even with the best rate deals, so really only saving about £170.00 per month once your loan and mortgage payments are made.

And on top of that you want to clear your £2000 credit card bill and even if you applied that to your credit card its still going to take you atleast 11 months (thats with no interest) to pay that off (£2000 / £170 per month = 11.76 months).

Not necessarily a bad idea, just thought I would try and point out something you may have missed.

lawrie7062

The way I calculated it is that £400 p/m over a 3 year fixed rate is going to save me £14,400 on what i'm paying at the moment. Say £12,000 max for repayment of the loan, then the £2000 pays off Egg with £400 left in my back pocket or £200 into each of my kids CTF.

As I say, the Egg card's the b**** at the moment as I can only afford the min repayments but at 29.9%, it's hardly scratching the surface.

Hax

FWIW: You can reject a rate increase for up to 30 days from notification of it. At that point, the account is closed to new transactions and you continue to pay the balance back at the previous rate.

Have you looked at applying for a credit card with a 0% balance transfer offer? That could be the lifeline you need to clear your credit card.

Just a thought

lawrie7062

They told me that yesterday when I called them:mad:

Because it's internet based, you get a lot of crap from them via email anyway so you don't pay full attention to the part about "opting out of a rate increase".

It sounded ridiculous to me as it was akin to turkeys voting for Christmas. "We're going to increase your interest rate by 3%, if you are happy, you need do nothing however, if you object, we won't do it???"

Edit: Re the 2nd part of your post, a 0% CBT would be awesome but I had to take a payment holiday in June last year from my mortgage which apparently goes down as an arrears (even though I contacted them and arranged it) and had to give up my BMW also as I couldn't afford the payments so I had to sell it back to them and pay the difference for the negative equity in the car, cancelling the loan agreement early which doesn't help my credit score. Even if there was a card that was less than 29.9%, i'd be happy enough with that.