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Re-mortgage - does this sound a good deal??

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Hi

I have spoken to many brokers over the last week who are looking into a re-mortgage for us. The situation we are in is this, we are on a woolwich tracker and the rate is 0.79% (i know brilliant rate) however we still owe £75,000 on the mortgage (our house is worth £186,500) and have debts of £25,000. We are wanting to consolidate our debts because the payments and interest on them are so high, we are short of money every month so we are sinking fast! I have asked the brokers to look at borrowing £100,000 over 25 years so our debts will be cleared. I have had one broker come back and offer a 2 year fixed rate at 4.79% with an independant fee of £299 (£150 will be refunded after a period of time). On this we will be paying £595.00 back a month. At the moment our mortgage is only £285.00 a month but then with the debt payments and interest we are paying around £800.00 per month. Our debt repayments are higher than our mortgage and that is the problem. Do you think we should go for this re-mortgage? My husband has a bad credit score and this is the only mortgage company that will offer us anything. The mortgage company is Kensington Mortgages, have any of you heard of these before? Our credit report in the next 2 years will be alot better because my husbands default will have come off and we won't be in debt to miss any payments. After the 2 years we are hoping to swap to a different mortgage lender (hopefully high street) and get an even better interest rate depending on the market at the time.

Can you give me any advice and weather you think this is a good idea? Many Thanks
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Comments

  • What age will a fresh 25-year term take you to ?

    (https://forums.moneysavingexpert.com/discussion/3070824)
    Act in haste, repent at leisure.

    dunstonh wrote:
    Its a serious financial transaction and one of the biggest things you will ever buy. So, stop treating it like buying an ipod.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    The odds of obtaining a better rate in 2 years time are very low. As there's every expectation that interest rates in general will have edged upwards in that time frame. Also you will have repaid very little capital off the mortgage in that timeframe

    By consolidating debt you are solving a short term problem and hanging a millstone around your necks in the longer term.

    Have you taken advice regarding your debts and financial circumstances? As I would think very carefully before letting go of a .79% rate tracker.
  • We are 30 years old so will be 55 years at the end of the mortgage.

    I can see what you are saying regarding the short term fix but we don't have any spare cash at the end of the month, I have an 11 year old, our house is in desperate need of doing up and i'm pregnant so we need the extra cash we will save a month by consolidating our debts.

    To pay off the money by saving will take around 15/20 years and we will have nothing to live on. I am quite angry with my husband as it's his debt and I have only just found out about it. Not having this debt and only paying £285 on the mortgage a month we should have been well off!!!
  • herbiesjp
    herbiesjp Posts: 8,499 Forumite
    This might sound obvious, but have you discussed raising the extra funds from Woolwich directly?

    It sounds like they are trying to get you off a good deal when you might not have to - you might have other options.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • herbiesjp wrote: »
    This might sound obvious, but have you discussed raising the extra funds from Woolwich directly?

    It sounds like they are trying to get you off a good deal when you might not have to - you might have other options.


    Before i knew about the debt i did go to the woolwich and ask for additional borrowing of £20k but the application got turned down because of my husbands credit report/rating.

    Do you think it is worth speaking to the woolwich about our situation and see if they can help? otherwise we will have to go elsewhere. xx
  • herbiesjp
    herbiesjp Posts: 8,499 Forumite
    I'm not sure what brokers you have spoken to, but it does not sound like they have discussed many options with you.

    IMO it should be a lst resort moving away from the deal you have - as it means you are increasing the low rate you are paying on your current mortgage balance.

    Can you get a second opinion from another broker - it could save you money?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    May be worth considering a secured loan ( 2nd mortgage). As although more expensive than a mortgage would mean your existing mortgage stays as is.

    Google moneysupermarket and secured loans.

    You may find that borrowing £25k over say 10 years is a reasonable longer term option. Far cheaper than borrowing over 25 years.
  • I have been to 3 brokers 2 of which came back with this Kensington mortgage company but one of the brokers quotes the 2 fixed rate at 5.89% instead of the 4.79%. Does that sound odd to you that its the same mortgage company but with different rate? If the lower rate is avaible why didn't the broker offer it instead of the 5.89%.

    I suppose it's not worth having a word with the woolwich as we were declined the additional borrowing of £20k? I just don't know what to do???
  • herbiesjp
    herbiesjp Posts: 8,499 Forumite
    Depending on the adverse, it may well be an option to speak to Woolwich.

    Or look at a secured loan.

    It looks like the brokers you have spoken to have been more interested in themselves rather than giving good advice.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thrugelmir wrote: »
    May be worth considering a secured loan ( 2nd mortgage). As although more expensive than a mortgage would mean your existing mortgage stays as is.

    Google moneysupermarket and secured loans.

    You may find that borrowing £25k over say 10 years is a reasonable longer term option. Far cheaper than borrowing over 25 years.


    Sorry i'm really not any good at this mortgage thing and i'm trying to understand it all. How would this work, could you explain. Would we get this with my husbands bad credit report?

    Are you saying we could get a second mortgage on the same house? so borrowing £25k over 10 years would be;-

    25,000 divided by 10 years = £2,500 per year
    £2,500 divided by 12 months = £208.33 per month
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