Remortgage & bad credit pickle

ElvisPresleysCat

Hi,

When I originally got my interest-only mortgage, my credit score was over 800 and my credit rating was exemplary.

Since moving into my flat, I've had some serious issues with cards, loans and debts. I'm finally at the point now where all debts are with external collection agencies and this has allowed me to breathe easy. Total monthly outgoing debt payment is £100. I have something like £12k outstanding. I now have pretty bad credit, the score was something like 300 when I last checked.

I'm thinking about remortgaging to get off the interest-only hook. However, I'm not sure which is the best way to do this. My mortgage is 100% and as far as I understand, the only way to do this is to save up a big lump of money, perhaps 10 or 20k and then approach a lender with the money and ask for the remortgage. Unfortunately, due to bad credit and no lump sum, I think I'm a bit stuck.

I'd like to know any and all options.

Thanks,
Adam.

ACG

You would probably need a bigger lump sum than that and even then the interest rate wouldnt be great.

Who is your current lender?
Presumably you are on their standard variable rate?

Ask them what deals they have available to you, you can always ask them to convert it to a repayment deal even if they cant offer you anything better than the SVR.

ElvisPresleysCat

My current lender is Birmingham Midshires and I'm on their SVR: The current Birmingham Midshires standard variable rate is 4.84%.

What are they likely to offer, if anything?

Thanks,
Adam.

ACG

I think they're only doing buy to let mortgages at the minute so probably nothing, but im sure they will let you go on to repayment - even if they dont you should be able to make overpayments as and when you want so you can get your balance down that way.

To be honest, even if you could find another lender, im not confident you would get it below 5% interest rate with you having payment plans set up. Your probably on as good as your going to get unless they can offer you something better - (I mean this in the nicest way) i wouldnt waste my time looking elsewhere personally.

ElvisPresleysCat

I'm mainly looking toward getting onto a repayment mortgage. What about something like the Virgin 'one' account? That would allow me to make overpayments etc.?

Thanks,
Adam.

ACG

Forget any lenders you know about, the only way of getting a mortgage elsewhere is by using a specialist lender and even then i wouldnt be confident (as you would need to get your mortgage down below 75% of the properties value) - their rates are higher with high set up fees to take account of the higher risk.

If you want repayment, you need to speak to BM solutions. They will be able to put you on a repayment mortgage im 99% sure of that - it might just be on their Standard variable rate (the 4.89% you mentioned) which actually isnt too bad of a rate considering the circumstances).

ElvisPresleysCat

Ok thanks, I'll call them tomorrow

Thanks,
Adam.

Thrugelmir

To clarify. You owe £12k which you are repaying at £100 per month currently. So this will take another 10 years to clear.

Do you have spare cash that you could overpay with every month?

ElvisPresleysCat

I could overpay, but is that an option that BM will offer? I thought mortgage payments on an interest only were fixed?

Thanks,
Adam.

Crashandburn

CaPPsiE wrote: »

I could overpay, but is that an option that BM will offer? I thought mortgage payments on an interest only were fixed?

As you are on their SVR, you can make unlimited overpayments. Would be a case of either ringing them each month to make a payment by debit or credit card or ask them for payment details to send it electronically.

Each payment will come straight off the capital and reduce the monthly direct payment too.

Means you have a lower base payment each month on the interest only and overpay as much as you like.

Would be worth looking at how much you need to over pay to get yourself on the equivalent of a 15/20/25 year repayment mortgage etc

Brock_and_Roll

Surely the elephant in the room is the £12k of unsecured debts?

This will have the highest rate of interest by far so all available cash should be thrown at paying this down/off before attention is turned to the mortgage.

If there was an overspending reason why these debts grew in the first place, then obviously this needs to be address before the OP will be in a position to save money each month to throw at debts.