Help & advice needed for our RIDICULOUS mortgage!

1jim1

ok then..thanks again for your replies.

Dunstoh...i understand what your saying but i dont think you fully understand, or i probably havent explained properly...when we borrowed 120k in 2007 we were basically told 'this is how much you can have and these are the payments you make' we said 'thank you very much, we will buy that property there'. Naivity, ignorance, stupidity, all of these things yes, we just wanted a property and in a naive way expected them to keep rocketing and evrerything would be rosy! obviously not the case. 4 years on we now understand a bit more and have realised that we are not in a very good situation. It has never been a case of not being able to afford the repayments, it was just that we got sold on the interest only mortgage and were extremely stupid and naive about it all. Now we are just trying to get into a property we are comfortable in for the forseeable future and take a POSITIVE step in the right direction as to paying back what we owe.

We have spoken to NRAM who have now told us thatif we buy a property for 110k (using the 100k we get for our current property and 10k savings) then we will automatically go onto a repayment mortgage with no charge. Come feb 2012 our mortgage contract ends and we have been told our rate will go from its current 5.89% to 4.79%, and our payments go from £607 to £640. This seems like our best option. We are now trying to self teach about mortgages (i realise this is a bit late in the game) so as we can look to the future. I feel this is a better option than declaring bankruptcy and posting the keys back to NR or NRAM or whoever deals with it. The reason i call this mortgage 'ridiculous' is because like shortchanged said.....we are just glorified renting as it stands right now, hence why we have started looking into if selling up, taking on a 23k loan and renting would be a better idea! Alot to think about and alot of pros and cons! Its very hard for people like us who are complete amateurs in this game! You live and learn though eh!#
Thanks all x

Burridge60

Scratching my head as the maths dont add up!

Typical NRAM lending!

You sold for £100 but owe £123 but can buy a house for £110. They must be porting the NE over and this is unsecured?

Are NRAM really allowing you to port this mortgage?

1jim1

Yea apparantly thats what they said they will do. we borrowed 120k in the first instance and 25k was always an unsecured loan, our property was 105k when we bought it the extra 15k was to consolidate existing debt.

MegaMiniMouse

1jim1 - you won't find an answer on this forum - there is too much smallprint to consider

go to a debt adviser, and take all the paperwork with you

MMM

hcb42

you got £15K worth of debt cleared in this arrangement, presumably that was not so 'ridiculous' at the time.

You need to get to repayment mortgage ASAP, and clear off this missing £15K by overpaying before you go anywhere..kids will have to share for a few years but that is more sensible than the alternative, which is you have this debt you are constantly postponing

poppy_f1

2 kids dont mean 2 bedrooms needed, they can share you know

if i was you iwould be looking at staying where you are just now and changing to a repayment mortgage

poet123

Do you know the difference between interest only and a repayment mortgage? with int only you need to have a repayment vehicle in place, endowment, savings plan etc. Do you have this? if not, my advice would be to convert the existing mortgage to repayment and stay put for several years and make a dent in the capital.

The reality is int only is not sustainable long term, and if you need to retain this type of mortgage you cannot actually afford to either move or reduce your mortgage, which is not good position to be in.

MegaMiniMouse

poet123 wrote: »

Do you know the difference between interest only and a repayment mortgage? with int only you need to have a repayment vehicle in place, endowment, savings plan etc. Do you have this? if not, my advice would be to convert the existing mortgage to repayment and stay put for several years and make a dent in the capital.

The reality is int only is not sustainable long term, and if you need to retain this type of mortgage you cannot actually afford to either move or reduce your mortgage, which is not good position to be in.

Interest only mortgages are ok if your house is guaranteed to increase in value....

MMM

poet123

MegaMiniMouse wrote: »

Interest only mortgages are ok if your house is guaranteed to increase in value....

MMM

And you are happy to have to sell

MegaMiniMouse

poet123 wrote: »

And you are happy to have to sell

Not at all - when the OP's mortgage began, nobody was considering the possiblity of falling house prices.

Times have changed, and the OP is an unfortunate victim

The banks however are doing just fine, thanks to the taxpayer bailouts

MMM