Fixed Rate coming to an end :(

MsJan

Hi Guys, wondering if anyone could help me.
In 2007 with help of my parents I bought a house for £220k (£70k deposit, £150k mortgage). The plan was for me to live in it and do it up and then sell it and then this "recession" happened and although it's in a good location, I would make a loss if I sell the house now.

For the last two years my interest only mortgage has been with a local building society at 3.29%. (discounted rate as they acknowledged 60%LTV) Now it's come to an end of its term and they are moving the rate up to 4.75% they have decided that due to the value of the property fallen below my mortgage I am no longer entitled to any discount. (hence 4.75% basic rate).

Is if worth for me to research other banks or building societies for remortgaging or should I just accept this new rate and pay extra £200 (approx) per month?
*might I add over last two years I've paid £7000 of the capital value so the mortgage is only for £143k*

Any help would be much appreciated!!

Thanks

GMS

If you owe more than the property is worth then you have no choice other than to accept what the current lender offers.

Interest only would also be an issue for a new lender even if there was equity.

amnblog

Are you saying you bought at property at £220,000 in 2007 and it is now worth less than £143,000?

I know some areas of the UK were badly hit on values but that seems extreme.

saverbuyer

amnblog wrote: »

Are you saying you bought at property at £220,000 in 2007 and it is now worth less than £143,000?

I know some areas of the UK were badly hit on values but that seems extreme.

The poster is from Northern Ireland, where average prices are down 60%+ since 2007. They could actually be in worse negative equity.

4.75% is a very good rate for a 100% LTV interest only mortgage. I assume it with the Progressive. I'd stick with this and pay the capital down. It's unlikely prices will recover in N.I. for a long long long time.

MsJan

Saverbuyer! you are correct!
Yes the property is in Belfast.
I've been thinking and 4.75% isn't so bad although I was chatting to the lender and they are willing to give 4.49% for next 2years or 4.69% for 4yrs..
I'm treating it as my pension fund, pay off capital slowly and hoping that eventually the prices will go back up or I could rent it out for around £700pm..