Re-mortgage advice please?

Nic1968

Hi,

Just got to the point where really need to sort our finances out, we owe £78,000 on our mortgage (19 years remaining), we have a secure loan of £22,000 (11 years remaining) and several credit card debts amounting to around £12,000 between us.

We have recently had the house valued as we did think of going down the route of remortgaging simply to get rid of the debts including the secured loan. We recently had the house valued at £135-140,000 so we know there is equity in it.

The problem is i have 2 defaults on my credit report , both from when i was ill 4 years ago and i fell behind with payments etc, we have never been late paying the mortgage or loan. We had only just got over my other half having a bad car accident the year before which didn't help.

I simply would like some advice as to which would be the best way forward, we seem to be just paying the minimum on the c/c and after all the general monthly bills it doesn't leave much, don't expect miracles but would like to be able to see light at the end of the tunnel.

Any advice or help would be much appreciated, thanks

kingstreet

Your liabilities total £112k. I assume the "valuation" was done by an estate agent with a view to marketing? In which case the actual value if a surveyor was to visit would be more like £120k to £125k, possibly less.

Sadly, that's going to make remortgaging very difficult as you may have insufficient equity.

handytips

Rule of thumb capital raising for debt con upto 75% of property value, i would be confident you would be able to raise a mortgage of £105,000 this would leave you with approx 7k left on the credit cards, however the money you would save on a monthly basis would probably enable you pay off a little extra, as for the defaults, as they are over 4 years old there may be one or two high street lenders that your scenario would fit. You need a broker to look at this for you and basically research the market as to who may be the best options given your circumstances. Good Luck

handytips

Kingstreet, the OP doesnt have to consolidate everything. Get on nethouseprices.com and have a look at the sold prices in your street, that will give a good indication as to value.

Nic1968

So it looks like my options are to continue being broke and try pay a bit more off the c/c which is already a bit of a squeeze, it's a catch 22 situation, would rather have the debt in one place (i know it's paying it over a longer period) but if we got back on track we could then perhaps start looking at overpaying the mortgage......well that was the thinking anyway.

I think i should do a break down of all our income and outgoings and see where we can perhaps try and cut back to find the extra money to at least clear the cards.

kingstreet

handytips wrote: »

Kingstreet, the OP doesnt have to consolidate everything

No. But experience suggests if the job isn't done 100% all in one go, the applicants never get out of the mess they are in.

I'm not saying they can do nothing, but I think they'll struggle to do everything.

You should know by now how pessimistic I am and try to always downplay peoples' chances...

Tixy

Nic1968 wrote: »

I think i should do a break down of all our income and outgoings and see where we can perhaps try and cut back to find the extra money to at least clear the cards.

Might want to consider posting this on the debt free wannabe section of the forums. The people there should be able to suggest areas you can save money/get things cheaper etc to be able to throw more to your debts.
This is the format usually used on that section - http://www.makesenseofcards.com/soacalc.html

Nic1968

Handytips thank you for your info, our last mortgage adviser was a complete waste of time and was recommended to us:(.

What is the best route for sourcing a good mortgage adviser, what should i be looking for, ie local independent....really haven't got a clue where to start:eek:
I knew it wouldn't be easy but i think this looks like it could be a tough journey!

handytips

You can find plenty of good advisors, On here, google mortgage advisor and your area, just ask if they are whole of market or not.

Nic1968

Sorry to be a nuisance but can you explain what you mean by 'ask if they are whole of the market or not'?:o

I've just googled an came up with a site 'unbiased.co.uk' who have given me a choice of about 4 different local ones to contact, think it will come down to how much it will all cost, what sort of fees should i be paying/not paying for advice?

Thank you so much

kingstreet

Here's an example of the difference between an independent mortgage adviser and a whole market mortgage adviser. I wrote it a few months ago but it's still relevant.

Whole market advisers may only select from lenders and products which pay them a commission, while an independent may agree a fee with you and pay to you any commission he receives. If a direct to lender product is better for you, the independent will tell you if that is better as you are paying a fee for the advice.

Here's an example;-

You see a whole market broker looking for a 25 year repayment £150k mortgage on a £200k purchase. You want the best five year fix, regardless of fees. You agree the broker will take commission on any arranged mortgage.

He finds you an Accord Mortgages product at 4.44% fixed until 31/08/2016 at £828.65 per month. The broker will receive commission of £487.50.

You then see an independent broker who agrees to charge you a fee of £299 and to pay you any commission he receives on any arranged mortgage. He also looks at direct to lender deals and explains that in this case, you may get the best deal, but no commission rebate.

He finds you the Accord option, but as you have a fee agreement, he tells you the commission rebate would be £487.50, leaving you £188 better off.

The best overall deal is Yorkshire Building Society's 3.99% fix until 30/09/2016. The monthly payment is £790.93. This is a direct to lender product, so no commission rebate. You've paid a £299 fee, but in doing so, the monthly cost of your mortgage has fallen by £37.72 against the Accord option, saving you £2,263 over the five year fixed term.

I'm sure someone will point out that you can save £299 by finding the best direct deals yourself and that is true. If you have the time and inclination to do that, why bother with a broker at all?