End of 5yr Fixed & Negative Equity

Amiz87

Hello,

This is only my second post so please be gentle with me

I have a mortgage currently with Accord Mortgages for £160,000
and we purchased our house 5 years ago for £177,500. at the time as we stretched our budget to buy this property, we did this on a interest only mortgage with the intention of changing it when our finances improved, but something has happened every year, redundancies etc which has prevented us from doing so.

Last year (following our third burglary) we decided we wanted to move...but after having our property valued at £145,00-£150,000 we soon realised we couldn't.

anyway our 5 yr fixed rate is ending soon, so my question is. Will the mortgage company allow us to continue with our mortgage of £160,000, either on a new fixed or variable rate is our house is only worth £150,000 as this would mean we then had a mortgage which is more than our house value.

if they wont allow it, what are our options, would be have to move to a smaller property, as we have no savings to cover the deficit.

any advise would be gratefully appreciated.

Thank you as always

Amy

P.S we are not planning on moving, we just need to keep the same mortgage that we have!

kingstreet

Your mortgage will have a follow-on rate, normally the lender's standard variable rate which will apply for the remainder of the mortgage term.

They may also offer you other products, perhaps a new fix. Lenders normally write with these offers close to the end of the current deal. Expect to pay a fee for a new fixed rate. Following on to standard variable rate will be free.

Amiz87

So just to confirm, does that mean that the house will not be valued? if this is the case would we have the opportunity to increase the mortgage by a couple thousand just to clear some debt?
we have always made payments on time and in full, but having paid interest only does that go against us?

kingstreet

Amiz87 wrote: »

So just to confirm, does that mean that the house will not be valued? if this is the case would we have the opportunity to increase the mortgage by a couple thousand just to clear some debt?
we have always made payments on time and in full, but having paid interest only does that go against us?

The house won't be valued unless you ask for more money. A request for further borrowing will be assessed according to the lender's current lending criteria and policy. As you are in negative equity already, I'd say borrowing more is both;-

a) impossible
b) daft.

Sorry.

getmore4less

The mortgage continues on the terms agreed when you got it, usualy promotioanal period(5 years fix in your case) followed by a variable rate either SVR or a base rate tracker.

Check your documents for what yours is or check with the lender.

With LTV allready over 100% you will not get any extra money.
this would not be clearing debt just moving it.

If you have debt then you have been borrowing money to pay the mortgge, you need to do full financial anlysis and probably best looking at debtfreewanabe board

Might be a good idea to stop buyings stuff people want to nick, common for places to get done over more than once.
They wait for the insurance payout and new stuff then pop round again to help themselves.

Amiz87

thank you for everyone's help

spending is already at a min....and as for not buying stuff people want to nick...firstly i dont agree you shouldnt be able to have the things you want in life just becuase others cant, but as it is i dont have stuff people want to nick....unless the lead of my roof, car bumpers & christmas presents are all of a sudden things we shouldnt have just in case someone else wants them....

I have made an appt with my mortgage advisor for more help, so hopefully he can help me with this

Amy

Engeroosi

It does appear you have overstretched by a small amount 5 years ago. Has your income not increase at all over the 5 years? I would suggest trying to lower your mortgage rather than increasing it, unless you plan on going to a repayment mortgage?

jimjames

Definitely worth looking to repayment mortgage which would help you start reducing the debt. What plan do you have in place to repay the mortgage at the moment?

If your house is worth less than your mortgage then moving isn't an option either as you would have to clear that debt first. Do you have space for a lodger or other ways to increase income? As suggested the Debt board here plus Living Below Your Means on https://www.fool.co.uk would be worth visiting

getmore4less

Engeroosi wrote: »

It does appear you have overstretched by a small amount 5 years ago. Has your income not increase at all over the 5 years? I would suggest trying to lower your mortgage rather than increasing it, unless you plan on going to a repayment mortgage?

Overstretched by a large amount and have had to take on debt to keep paying the mortgage.

Currently no repayment vehicle.

Amiz87

as per my original post when we bought this property we were let down by our buyer and consequently were homeless for 6 months in that time house prices increased alot (we know we overpaid and were never going to get back what we paid for it) , so when we bought yes we did strech our budget to buy this house and thats why we went onto re-payment only with the intention of waiting 2 years till our loan paid up and then go onto full repayment. but as i also said that very same year my fella lost his job and was out of work for 5 months then within a year i lost my job and was working part time for 6 weeks. all that alongside having our car stolen (£6000 worth!) and not getting an insurance paid out untill 4 months later, yes we never got round to upping our mortgage. so this year (March) i finally got a new job that pays better, and my fella also got a new job with pays better, however he had an eplieptic seizure in december (after been seizure free for 16 years) and was issued with a driving ban for 12 months which means he had to re-deployed (as his job was mainly a driving job) which ment a 5k pay drop.... so we really struggled but through all this we never missed a payment, we just learnt to live a tiny budget

sorry to go on but i feel i have to justify myself, as we are not bad people who have used credit cards/loans etc to pay our way through. in fact the only debt we have is a £400 overdraft. we paid of our last bit of debt last year (saving us £400 a month) so considering the circumstances i think we have done bloody well.

I know this has nothing to do with my question but as others seem to be more interested in my finances i thought it best to explain.

so yes when we get our new mortgage (jan) next year both me and my fella will be on full wage again and will start paying full repayment!

nicknameless

Amy,

You don't have to justify yourself at all. Nobody on here has complete knowledge of our respective circumstances. I've been reading this board for a few months now and it really is a wonderful resource with some wonderfully helpful posters. It's just a shame that some people can't help themselves with holier and more knowledgeable than thou attitudes, with the benefit of their hindsight fuelled crystal balls.

Don't let that get you down and use the constructive non-judgemental advice as best you can.

I hope things come together for you.

N.