Mortgage Deal Ending

robey1978

Hi,

My current mortgage deal ends at the end of May 2011. I am on a fixed rate of 7.10%. My rate drops to 2.44% + the Bank of England base rate which is 0.5% at the moment. So my mortgage is going to drop. My house was valued at 170,000 3 years ago and I didn't have a deposit at the time so I took out a 97% mortgage. I paid 165,000 for the house. My payments are 1115 a month. My mortgage should drop around 400 a month. I am overpaying the mortgage at the moment by around 200 a month but I want to keep paying the same as I am now so I should be overpaying by around 600 a month.

The problem is my house value must have dropped by around 10% so it's probably only worth around 153,000. The mortgage is currently sitting at around 159,000 so I will not be able to get another mortgage deal even if I wanted to. I know the interest rates are low just now but for how long will they stay this low?

Does anyone have any advice on my situation? I'm feeling a little trapped. Even if I overpay by 600 a month it's still going to take me a year just to get my mortgage down to the same as the value of the house. It will take me about 2 years to get around 5% equity in my house.

Thanks in advance for your help and advice.

whatyadoinsucka

its not all bad, you have been paying a rate that would only be met when base rate goes up by another 4%, short term this just isn't going to happen for at least 6 months if not a year then even 2 years..

the economy still hasn't felt the full impact of job cuts in the public sector, and growth is stale, so base rates ain't going up for some time to come. If i was you i'd keep on overpaying your current figure and any spare cash should be put towards the mortgage.

its worth giving your current lender a ring and finding out the value and what options you have. like you say you may be limited

dimbo61

Just carry on overpaying and £600 a month with have a big effect over 2/3 years plus you are reducing your debt every month so when rates do go up you wont feel the effect as you are already overpaying

anh1904

Check what rate you definitively go on to, and call the mortgage company to see what the options are.

2.44+base is a fantastic deal for what will be a near 100% LTV, and you wouldn't get anywhere near it out on the market.

If you pay £1300 (or is 1100 including the overpayment) you will repay about 10k/yr, so the situation could improve significantly over the coming few years giving you further options.

Deal you think you fall onto looks very good indeed though, so just overpay what you can (assuming this is your most expensive debt) and overpay whatever else your situation allows ... there's a snowball calculator somewhere which will show you quickly what the impact could be.

Lifes_Grand_Plan

You are doing exactly the right thing already OP, you have already been overpaying, and with the minimum payment dropping, you want to keep paying the higher payment. This is fantastic.

Most people (not MSE'ers) would think "oh great, now I have an extra £XXX pounds a month to blow on clothes / booze...

Ok so you are in a precarious position with regards the LTV but just keep overpaying your regular payments, see if you can cut back elsewhere to make even more overpayments and just keep going.

Well done for a) knowing you had a problem, b) coming on here to address the problem and c) already having done a good thing (overpayments) to help solve the problem.