Mortgage please help :(

adethfc

Hi All

Ive not dealt with my finances for sometime and just stuck my head in the sand. I dont really have any big debts other than the mortgage. As long as ive always been able to cover bills then ive been happy.

I now have 2 kids and childcare is costly, slowly my balance has gone down and now at the stage where i need to do something.

my mortgage is up for renewal march 2012.

House is worth 170k and my mortgage outstanding is 136k.

i currently pay £860 a month (5.89%) and will move to £910 (6.5%) in march. i will pay a repayment fee off £600 if i move now.

im not sure what type of mortgage is the best option currently. my main aim is to get my monthly payments down for 2 years as then my kids will go into school and i will save on childcare.

Any advice anyone one could give me would be hugely appreciated.

Wh05apk

Are you sure its going to 6.5%? seems very high, are you referring to the original quote which may have been calculated when base was at 5.75%?

Assuming income etc fits, then you could get the rate down to less than 3.5% BUT that will be subject to you being less than 80% LTV, so your house MUST value at £170k, otherwise the rate will be closer to 4%, which will still be a saving.

kingstreet

Even at 80% loan to value (£136k on £170k) you should be able to get a better rate than both what you're on now and what you'll revert to next year.

Is there any reason for these high rates? Have you had credit problems which might still affect you? Incomes cover the mortgage without too much stretching?

As you get within a couple of months of the end date of the fix, you need to ask your lender what they will offer you to stay and you need to look at other lenders' products for remortgaging to them. Often they'll cover the transfer costs, so it may be cheaper to do this than you think.

dimbo61

Why will you move to 6.5% in march 2012 ? Are you looking at old paperwork from when you took out the mortgage . Who are you with? and was it a sub prime lender.
You could look at a 2/3 year fix but I think that a visit to a " whole of market mortgage broker " would be a good idea.

holly_hobby

Your current deal seems v high - so you can definately save.

Choosing the most suitable product - well whilst trackers are currently low, as a result of a low base rate, they are very attractive if you have the capacity to absorb without issue, future rate increases.

If you would prefer to know for a defined time what your monthly costings will be, i.e you say 2 yrs until you save on childcare, you may wish to consider a fixed rate. This will have a slightly higher headline rate then a tracker deal, but the trade off will be to give you stability over the given period.

I would suggest speaking to a whole of market broker, to source the most suitable product and lender for you and your circumstances.

You may wish to wait until you are out of your current ERP costing £600 - or see if your broker can source a product for you now, that not only acheives your goals but also recoups in savings your £600 erp - which I think based on your current pay rate is very achieveable if a standard app. (by the way there are lots of fee free remortgage deals about too - so that will save you basic legals & survey costs).

Hope this helps

Holly

dimbo61

And 2 mortgage advisers beat me too it already !!

dimbo61

Make that 3

Wh05apk

dimbo61 wrote: »

Make that 3

3? I can only see 2?

holly_hobby

Wh05apk wrote: »

3? I can only see 2?

Been there, seen it, done it, trained it, I'm afraid.... poacher turned gamekeeper now ..

H

Morgage_Confused

my guess is thats going to be a fantastic follow on rate. something like base plus 0.75%

adethfc

Thank you all for your comments. im very grateful!!

i took the deal out 5 years ago which is why so high i guess.
My credit has always been good, if anything im fed up of the bank constantly trying to give me a loan.

My current deal was with hsbc. i will check what they are willing to do for me and follow up on the advice you have given me.