100% deal, interest only coming to an end.

jco

Hi,

I'm new to the forum, but would appreciate any advice.

Naively and as we were desperate to get on the property ladder we took out a 100% interest only mortgage five years ago (Northern Rock, 80% mortgage and 20% personal loan). I realise in hindsight that it would have been better to wait for a decent deposit to be put together, but we can't change that.
We have however made all payments and where possible tried to overpay (Not by much, a few £100's here and there when we could). We will very soon reach the end of the five year deal and find that our account is now with NRAM, who are not particularly helpful! We would like to change from an interest only to a repayment mortgage and have been given a quote of around £150 extra a month on the only option variable rate. This is manageable for us.
Unfortunately the value of our house is maybe £20k less than when we purchased it and with an interest only mortgage we haven't actually cleared anything on what we owe, so in effect we have been paying very costly rent for 5 years.

My question really is, can we re-mortgage with another organisation?

Or does the combination of our house price and lack of deposit mean that we are stuck where we are for a while until we can "Clear" some of our debt?

Any help or advice would be greatly appreciated.


Kind Regards
JCO

_Andy_

At such a high LTV a remortgage to another lender won't be possible.

somethingcorporate

No lender would crystalise your negative equity, the risk would be too great. You'll have to sit tight and continue to overpay.

Thrugelmir

Switch to the repayment mortgage option. This will at least start the process of paying the debt.

Suggest you visit the Debt Free Wannabe board for advice and support. As the only way of making serious inroads into the debt. Is to overpay the mortgage by as much as you can for a period of time. Cutting back to a very basic standard of living in order to scrimp and save will pay off in the longer term.

opinions4u

jco wrote: »

Naively and as we were desperate to get on the property ladder we took out a 100% interest only mortgage five years ago (Northern Rock, 80% mortgage and 20% personal loan). I realise in hindsight that it would have been better to wait for a decent deposit to be put together, but we can't change that.

You are where you are. Just one of those things. Good that you're looking for ways out.

We have however made all payments and where possible tried to overpay (Not by much, a few £100's here and there when we could). We will very soon reach the end of the five year deal and find that our account is now with NRAM, who are not particularly helpful! We would like to change from an interest only to a repayment mortgage and have been given a quote of around £150 extra a month on the only option variable rate. This is manageable for us.

Do it. Pay more if you can.

Unfortunately the value of our house is maybe £20k less than when we purchased it and with an interest only mortgage we haven't actually cleared anything on what we owe, so in effect we have been paying very costly rent for 5 years.

Again, it's one of those things. I had a similar problem with a 95% mortgage in 1995. Got a lucky break and a good estate agent so was able to preserve the money I'd saved to repay my negative equity.

My question really is, can we re-mortgage with another organisation?

Nobody wants NRAM's negative equity mortgages. If they did, the government would have sold it them!

Or does the combination of our house price and lack of deposit mean that we are stuck where we are for a while until we can "Clear" some of our debt?

Yup. Stinks, doesn't it.

No solution but to keep chipping away. Hopefully house prices will edge up too. I don't usually advocate a lottery ticket, but if it keeps the hope alive ...

Thrugelmir

opinions4u wrote: »

I don't usually advocate a lottery ticket, but if it keeps the hope alive ...

May seem a long road ahead. But every £1 paid off the mortgage, reduces the burden. You won't be in negative equity for ever.