HELP - Remortgage issues

kezmark60

Hi,
I'm hoping I could get some advice...

I am currently on a 30 year deal with Northern Rock, coming towards the end of a 5 year fixed rate. I'm looking to re-mortgage onto another fixed rate, but my equity is only approx 90%, and I'm being told by Northern Rock's connected company Central Mortgages that I need to get down to 85% to qualify for any new deals.

My current mortgage was originally 100% (90% mortgage and 10% unsecured loan). I had a brainwave to get a loan to pay off the unsecured loan part with Northern Rock, but I'm struggling to find a bank who would lend me enough money to do this.

I've got my first kid on the way, and I'm terrified we're going to be homeless! It absolutely stinks as for 10 years I've never missed 1 single payment on anything and now I'm in this position. I'm so angry and worried sick about what to do now.

Is there anybody else in a similar position and would you be kind enough to suggest a solution?

Thrugelmir

Is your mortgage and unsecured loan on an interest only basis?

kezmark60

No its a repayment...only £3k has come off the capital despite paying them roughly £33k over the last 4 years or so...seems very strange

Thrugelmir

That's down to the mortgage term you opted for at the outset and the fact that interest is loaded at the front end of a mortgage.

At least you are on a repayment mortgage so are slowly reducing the balance owed.

There would be little point in moving your unsecured loan elsewhere. As the interest rate you'll be charged is unlikely to be as low as you currently pay.

Your best option. If you can afford it considering your circumstances. Is to overpay the unsecured loan every month. Even by a nominal sum. As this will reduce the amount you owe and correspondingly reduce the amount of interest you pay every month. Given time you'll reach the 85% threshold that will enable you to remortgage.

There's no quick solution. Pay a visit to the Debt Free Wannabe Board. Plenty of good advice and support on there.

blueberrypie

Thrugelmir wrote: »

and the fact that interest is loaded at the front end of a mortgage.

There's a lot of confusion out there about how interest rates and mortgages work, and I think that when people talk of the interest being "loaded" at the front, a lot of people see it as some sort of get-extra-money-out-of-the-borrower scheme that the lenders run, in which they work out how much interest you'll pay and then charge you more of it at the beginning.

Many borrowers don't understand that the reason you pay more interest in the early years of a mortgage is that you *owe* more then. I think if the above was written as "the fact that you owe more interest in the early years of a mortgage (because the amount you owe is more)" - that would be clearer and lead to fewer people thinking along the same lines as this one did: http://forums.moneysavingexpert.com/showpost.php?p=42815424&postcount=14

kingstreet

kezmark60 wrote: »

Hi,
I'm hoping I could get some advice...

I am currently on a 30 year deal with Northern Rock, coming towards the end of a 5 year fixed rate. I'm looking to re-mortgage onto another fixed rate, but my equity is only approx 90%, and I'm being told by Northern Rock's connected company Central Mortgages that I need to get down to 85% to qualify for any new deals.

My current mortgage was originally 100% (90% mortgage and 10% unsecured loan). I had a brainwave to get a loan to pay off the unsecured loan part with Northern Rock, but I'm struggling to find a bank who would lend me enough money to do this.

I've got my first kid on the way, and I'm terrified we're going to be homeless! It absolutely stinks as for 10 years I've never missed 1 single payment on anything and now I'm in this position. I'm so angry and worried sick about what to do now.

Is there anybody else in a similar position and would you be kind enough to suggest a solution?

What about leaving the unsecured loan in place and remortgaging the secured part only? You'll have to satisfy the new lender you can afford both payments and you'd have to pay a higher rate on the unsecured loan than you currently pay. If you can reduce the cost of the secured portion you'd reduce your overall costs, perhaps leaving money over for you to make overpayments to the unsecured section.

Needs a bit of working out, but is an option.

Jenniefour

kezmark60 wrote: »

Hi,


I've got my first kid on the way, and I'm terrified we're going to be homeless! It absolutely stinks as for 10 years I've never missed 1 single payment on anything and now I'm in this position. I'm so angry and worried sick about what to do now.

OP - when your 5 year deal ends you'll simply go onto the SVR of the lender and you won't be homeless providing you can continue to pay the mortgage. I'm adding this bit because it looks like you think you'll be homeless if you can't get another deal - not true, you're on a 30 year mortgage. If you knew that already just ignore.