Need Advice - shared ownership mortgage

newcook

I would be really grateful for any advice!

my partner and I bought our first house last August which is a shared ownership (part buy part rent) but due to poor credit we had only 1 option of mortgage lenders who we have to be with for 3 years before we can move the mortgage (or pay a fine depending on the amount of time left of the 3 years). because of the poor credit, the % is about 2% above norm and is a variable so with the interest rates rising every month our mortgage goes up!
we would like to change mortgage company and buy the 2nd half of the house at the same time but have very little idea of how to go about it.
are there any bods out there who have done a similar thing who could offer advice please?!

worcester1

No need to rush, i suggest you sit tight, see out the 3 years. After which you would have repaired your credit and then anyone of the highs street banks woulld offer you a much better deal than you currently on.

Here is an example;

My friend went with GMAC because of his poor credit history and was tight to the mortgage for three years. During which period he paid them (repayment & interest) a massive £29K and only £6K went towards reducing the balance of the mortgage.

When the mortgage ended with GMAC, He re-mortgaged with Abbey and saving himself a massive £180 per month.

Should you try and leave now, you will be hit with a massive early repayment fee. as well as your repayment going up with your new lender (as you have borrowed more, to buy the other 50%). I don't think you can afford all these heavy expenses.

Take for instance;

Your current mortgage repayment is £400+p/m, your share ownership (Housing association) service charge is £180+p/m. NOW you are thinking that the service charge you currently paying is going down the drain????

Should you increase your share and get another crappy mortgage (because of your poor credit history), you will end up paying nothing less than £1,200 p/m. Now can you afford this?? If the answer is no, then put the extra money you would have paid had you increased your mortgage in a good saving acount.

when the three years are up, you can up your stake, have equity on your property and further more have a healthy savings to put forward a decisive down payment (deposit) thus reducing the amount you need to borrow and reudce your overall repayment.

Hope all this helps. Don't strecth yourself and throw yourself at the mercy of those very bad people (prime mortgage companies).

Madjock

sub prime mortgage lenders are not bad people, they offer money to high risk customers.
i would advise sitting tight as long as you can. Your credit rating wont have changed enough yet to get a much better rate, it wont be worth your while changing.

worcester1

I disagree, they are bad as the come - parasites they are. Fair enough you've made financial mistakes in the past and they are taking advantage of that.

You being a high risk is bull. Having found the right path and trying to be more responsible is a positve attitude and good luck.

If they aren't so bad then how come people with good credit aren't using them. Because you've killed before, paid your debt to society, doesn't mean that you will come out of prison and kill again. This my friend is where prime lenders step in, prey on the mis-fortunes.

How can you justify that they are not bad people, when they drain people out of their hard earn cash? £21k interest they charged my mate.

The less financial commitments you have with these people the better. Also the less you owe them the better. So stay tight until, you leave in 3 years time.

newcook

Thanks guys - I thought that may be the case with having to sit tight with the 3 year tie in. its sods law that just before we signed on the dotted line that the interest rates hadn't moved for 5 or 6 years and now they are going up every month! its good to get other peoples opinion on it though especially as some of you have had friends in similar positions

toonfish

worcester1 wrote:

I disagree, they are bad as the come - parasites they are. Fair enough you've made financial mistakes in the past and they are taking advantage of that.

You being a high risk is bull. Having found the right path and trying to be more responsible is a positve attitude and good luck.

If they aren't so bad then how come people with good credit aren't using them. Because you've killed before, paid your debt to society, doesn't mean that you will come out of prison and kill again. This my friend is where prime lenders step in, prey on the mis-fortunes.

How can you justify that they are not bad people, when they drain people out of their hard earn cash? £21k interest they charged my mate.

The less financial commitments you have with these people the better. Also the less you owe them the better. So stay tight until, you leave in 3 years time.

I can't agree with this, lenders are entitled to adjust their rates to cover the risk of the lending. It's the same reason you get a better rate if you have more equity, or need smaller income multiples.

It is a fact that a large number of "sub-prime" borrowers will continue to be "sub-prime" for a long time to come, as evidenced by all the debt management planning companies and the like that are springing up.