Remortgage help - worried

Popeye84

Hello all,

I have had my head in the sand in regards to my current financial situation but it has now come to a point where I really need to evaluate things.

I am due to remortgage in Feb/March next year when our 2 year fixed rate of 5.98% will come to an end.

We purchased the house for £210k and had a 90% mortgage. We currently have around £185k on the initial mortgage to pay.

The problem is that at the moment I am overdrawn to the tune of £500 and I also have £1k on a credit card. I also have a £5500 loan that I took out in the summer to fund a new car that is vital for my work. I earn £30k basic and comission on top and my partner earns £34k with comission on top.

I am really worried that we won't be able to get a new mortgage deal. What would happen if we are refused? Would we just go onto the SVR rate? Any information would be appreciated as this is the 1st time we have had to remortgage.

Many thanks for the help in advance.

opinions4u

I am really worried that we won't be able to get a new mortgage deal. What would happen if we are refused? Would we just go onto the SVR rate?

A lack of equity would be a highly possible reason for not being able to remortgage.

So your lender's SVR (or whatever follow on rate was highlighted in your mortgage offer) is where you'll probably end up.

Depending on the lender, this may be a good thing. Who is the lender? What rate does your mortgage offer / key facts document say you'll move on to?

I would, however, strongly advise you to get on top of your finances. £64k of joint income, before bonus, and yet you're running silly balances on credit cards and overdrafts and borrowing money for a car you could have saved up for.

Take a look at www.makesenseofcards.co.uk and complete a statement of affairs (SOA). Work out what savings you can make, clear the credit card and overdraft, start building up a savings balance and take it from there.

Popeye84

Thanks for the information. The SVR is quoted at being 3.99% and we have the mortgage with Nationwide.

I just constantly have it in my head that if we can't remortgage we will lose the house?! I hope this is not the case...if new mortgages cannot be offered are home owners normally put onto the SVR?

grey_lady

You should go onto their SVR and it sounds like your monthly payments will be lower :j - giving you a chance to put the extra towards paying down your debt :-)

Popeye84

Hmm so not as bad as I 1st thought then. I will look to clear my overdraft and then credit card asap then. Still don't think I will sleep easy for a while.

Yorkie1

You do not have to remortgage at the end of your fixed term deal. As others have said, your Key Facts Illustration document will describe the rate you will automatically go onto, either the SVR or another (even lower) rate.

Both of these rates will be lower than your current fix so your repayments should go down - again, as another poster has said, allowing you to repay the more expensive debts and then overpay the mortgage once you've built up enough emergency savings again.

There is no reason for you to lose the house unless you actually stop paying the mortgage.

Popeye84

Yorkie1 wrote: »

You do not have to remortgage at the end of your fixed term deal. As others have said, your Key Facts Illustration document will describe the rate you will automatically go onto, either the SVR or another (even lower) rate.

Both of these rates will be lower than your current fix so your repayments should go down - again, as another poster has said, allowing you to repay the more expensive debts and then overpay the mortgage once you've built up enough emergency savings again.

There is no reason for you to lose the house unless you actually stop paying the mortgage.

Thanks for the information Yorkie. I will get my head down over the next few months and hopefully clear some of the debt. If I manage to get my debt down to just my agreed loan of around £5500 hopefully we may have more chance of getting a new mortgage.

Meeper

It's not your debts that will be a problem in getting a new mortgage, it's the amount of equity you have - or rather don't have.

Popeye84

I didn't think we would have a problem with the equity as it would be less than 90%??

Meeper

Exactly. Unless you have equity of around 25%, you won't find anything better than sticking with Nationwide's SVR.

knightstyle

Agree with above and don't worry about a thousand or two on credit cards, just say they will be paid in full soon on the mortgage application.
The mortgage provider will insist on decent equity and ability to repay loan and interest so these are what you need to improve on if possible.