Mortgage renewal a d life changes

SplanK

Hi all,
Our mortgage is up for renewal in Sept 13 and already starting to prepar ourselves to ensure we are able to get the best deal if going from fixed rate to variable rate is not the best....

However we are expecting our first child in June and ideally we could do with a new car (to increase suitability for family life and to replace a 'banger' that's starting to show its age)

We have very little debt, just the mortgage and a small dfs 'buy now pay over 3 years' sofa loan which we are a year into and loan was 800!. Both have student loans

I have 2x credit cards, one with 6400 credit (Natwest), and the other with 2400 (tesco). The wife has 1x card with 7400 (tesco) credit on it. We only use the cards for the protection they offer and to collect club card points. Paid off in full each month.

As for income, I'm on 30k and wife is on 22k and we are able to scrape into savings wife's full wage (although we pay car ins/house ins/tv licence/road tax out of this each year in full)

We currently have around 25k in savings, and also over pay our mortgage by £30 a month (more to round it up to a nice figure)

So all in all a good position.

My plan was to cancel my un-used credit card as it was only ordered so I had 2 for a car hire for our wedding early this year, and take out another under the wife's name so we can load around 50% of the new car (other 50% coming in form of cash from savings) and just pay it off in the interest free period. Credit card would be loaded with around £4500 from car purchase.

However with the wife going on maternity (6momths full pay, 3 months standard maternity and 3 months nothing), and loading her up with more available credit, I was wondering if this plan/situation would have a massive impact on potential mortgages renewal (currently 6.5%ish), and maybe we should be looking at further reducing our available credit.
Thanks

ValHaller

On that scenario, I would not bother with reducing available credit - you are squeaky clean if you pay it off in full each month - as long as your wife goes back to work, because your available credit will be below 6 month's income. But if she does not go back, just drop one card.

It won't hurt you to pay off the sofa and done with it. And as for the new car, to me it makes sense to get the remortgage in the bag first.

Thrugelmir

You may be better of paying for the car in cash. With savings rates dropping. The balance transfer fee may outweigh any interest earnt.

If you are paying 6.5% interest on your mortgage. Then overpay by whatever you can afford to. As that's where savings will be made.

SplanK

Yep, the plan for her at the moment is to go back to work after maternity leave and for the child to go to nursury (I almost fainted when I looked up the cost lol!)

I was thinking of paying off the dfs loan, but its only £15 a month but will keep it in mind as its one less outgoing.

The car situation I suppose we could stretch out the use of the existing motor until after mortgage renewal, she will just have to use the bigger of the 2 cars (being a 5 door) and i will just use the 3 door banger to get to work and back, it's not ideal but if it allows us to gain a leg up on a renewal we could make it work.

I wanted to avoid letting our savings drop below 20k, hence the mini credit card loan to get around it. It's nice to have. Nice lump sum of cash in case we need, and with plans to move in the next 5 years it may come in handy to lower LTV rate...

opinions4u

If you did drop below £20k you could top up again with the money you don't have to use repaying debt.

dimbo61

What does the mortgage revert to at the of the fix ?
You need to check this first.
Depending on LTV you can now get a 5 year fix at 2.79% with the Coop and others.
The fee is £999 so you need to factor this in

SplanK

Not quite sure what it will drop to, I have in my head 4% but I could be completely wrong. Currently with C&G 5 year fix.

I would be interested in another 5 year fix (although I did screw myself over with this fix, I do like knowing that what I pay is fixed for the term and that it won't move!)

I just need to make sure that what ever I do now such as getting a new credit card won't cause any knock on effects or making ourselves look better by getting rid of excess available credit for getting a re-mortgage at a good rate come renewal.

opinions4u

A C&G mortgage from 2009 will be likely to have an SVR of 2% over BBR.

A big option would be to stick with that and overpay as if you were still fixed at your current rate.

Simon_gloster

Any mortgage advance pre 1/6/2010 would revert to SVR currently 2.5%. After, its revert is the HVR currently 3.99%. OP, sounds like youll go to 2.5%, as O4U said, consider the next 12 months income stream against the SVR and decide what would suit you best.

SplanK

Thanks all,
After discussion with the wife, we have decided for now to keep plodding along with the existing cars and make them work for us in our new situation, and take a look where we are again in 12 months time once we have settled with what ever decision is made with the mortgage!