Mortgage options

amn_2

I'm pretty sure I know where I stand with this but thought I'd throw it out there in case I've missed something!

First the background, my wife and I currently own a 2 bed terrace with an outstanding mortgage of approx £110k. The mortgage is with NRAM and currently on their SVR. The house next door has been up for sale for around 4 months for £110k with little or no interest so it's safe to say we are probably in negative equity, I'd imagine it's probably worth around £100k, maybe a bit less. I wish I'd rented rather than bought five years ago, I'd be in a much better position :rotfl:

We have started to overpay on the mortgage every month now and make an additional overpayment of £1500-2000. We are looking to buy a larger property as soon as possible and hope to be spending around £200-250k.

So on to the questions. Firstly, if possible, I'd like to know are there any options to reducing our current rate? I'm guessing as we have no equity the answer will be no.

Secondly we are basing our figures and time scales on a deposit of 10% for the next property. Is this a realistic deposit amount or would 15% open a lot more doors? I'm assuming there are no options for less than 10%, as I said we'd rather move sooner than later One final question is that we plan on ploughing all our money into the mortgage as the rate is far higher than any savings account at the moment (4.79%), is the lack of a cash deposit likely to cause us issues during a move? Should we start setting some cash aside as we reach our target deposit so we have some cash available for the deposit or is equity sufficient?

Thanks for reading, I look forward to getting opinions

Dave_Ham

Hi there,

Is the NRAM mortgage all secured, or was it one of the deals where a % was unsecured?

You will require a deposit for a new purchase. If your credit files are spot on, you may be able to get away with a 5% deposit although these are very tough to achieve with not the most attractive rate...

Thrugelmir

You will need to find a cash deposit to purchase the new property. Normally 10%. Part of which will come from the sale of your property.

To start with best to overpay your existing mortgage. As will save you far more interest than you will earn. Might help in selling the property at a lower value more palatable.

Worth remembering that as property prices fall. Those above will fall further and the gap narrow. So not all bad news.

amn_2

Dave_Ham wrote: »

Hi there,

Is the NRAM mortgage all secured, or was it one of the deals where a % was unsecured?

You will require a deposit for a new purchase. If your credit files are spot on, you may be able to get away with a 5% deposit although these are very tough to achieve with not the most attractive rate...

Hi Dave, the NRAM mortgage has an unsecured part as well. I'm currently putting all over payments towards the secured part. Credit wise I am (I believe!) in a very good position. Never missed a payment, little debt with only a couple of thousand on a 0% card which will be cleared before applying. I have some credit agreements that are regularly serviced and one credit card that is paid in full every month. It's the rate that concerns me more, if it's a case of waiting a few more months for a much better rate then that's what we'll do I guess.

Thrugelmir wrote: »

You will need to find a cash deposit to purchase the new property. Normally 10%. Part of which will come from the sale of your property.

To start with best to overpay your existing mortgage. As will save you far more interest than you will earn. Might help in selling the property at a lower value more palatable.

Worth remembering that as property prices fall. Those above will fall further and the gap narrow. So not all bad news.

So when you say a cash deposit this can be equity in the house? I'm happy to start saving cash towards the end if necessary but obviously the rate difference is pretty vast so I'd like that to be as little as possible.

The narrowing gap is the only reason I can smile about it Could move quicker without the negative equity but what can you do eh!

Thanks for the replies so far

Dave_Ham

Depends upon your eagerness to move really.

You can take the unsecured part with you to a new property (albeit on a higher rate) although subject to the breakdown, this may give you the deposit on sale - if it works of course...

Will depend upon the detail, although otherwise do what you are doing and keep overpaying...

All the best

Thrugelmir

amn wrote: »

So when you say a cash deposit this can be equity in the house?

No. You will require a cash deposit when you exchange contracts.

Likewise the buyer of your property will lodge a deposit.

The legal costs, stamp duty and estate agents fees will be settled on completion. So not necessary to have cash available for these costs.

amn_2

Dave_Ham wrote: »

Depends upon your eagerness to move really.

You can take the unsecured part with you to a new property (albeit on a higher rate) although subject to the breakdown, this may give you the deposit on sale - if it works of course...

Will depend upon the detail, although otherwise do what you are doing and keep overpaying...

All the best

I had always thought that keeping the unsecured loan would impact on my affordability calculations too much but it could be an avenue worth exploring. I think I would get a lower rate on a new personal loan than I would with the NRAM premium so that may also be an option.

Thrugelmir wrote: »

No. You will require a cash deposit when you exchange contracts.

Likewise the buyer of your property will lodge a deposit.

The legal costs, stamp duty and estate agents fees will be settled on completion. So not necessary to have cash available for these costs.

Ah right thanks, a bit of cash saving at the end instead of overpayments then!

Thanks again to you both