Advice needed

Racjam

We have recently cleared all our outstanding debts and now looking at sorting our mortgage. Currently we have £112000 outstanding with a value of approx £135000 and 19 years left. This is where it gets tricky my OH was made redundant in July during pregnancy (still haven't been paid redundancy or maternity pay that the employer should but that's another long story) my current salary is £28,660 OH is £0. Our current mortgage is an old Northern Rock that we are currently on 5.59% with, obviously with this being so high I would like to reduce this. The problem is I have a default on my credit file from November 2008 so would it be better to wait and apply end of 2014 when hopefully OH will have another job or is it likely we could make enough of a saving to apply with anyone now?

kingstreet

What's the early repayment penalty?

Do you have the money to pay that, or do you need to add it to the loan?

How many children? All existing credit repaid? Mortgage term? Maintenance payments? Student loan? Amount of default at time of registration? Default visible on all three versions of your credit file?

I've just run the case through the Halifax affordability calculator and with two adults and one child, you're about £5k short over 25 years. You just about creep over the £112k line over 30 years. You're going to be in trouble if there's an ERP to add to the loan.

You'll definitely need a lender normally offering 5x income.

You might as well seek out a whole market broker now. It would be worth planning the approach now, even if you don't do anything until later in the year...

Racjam

There is no ERP as now on SVR. We have 2 children and no outstanding credit bar mortgage. The default amount was £2000 back then. Do you think it would be better to wait til OH is back at work?

kingstreet

Better? It's not about better, it's about do you have any choice.

With two children, you get nowhere near £112k, even over 30 years.

Like I said, talk to a broker and map out a plan. Don't forget all three versions of your credit file...

Have you asked your current lender about a customer retention product as an alternative to a remortgage?

Racjam

Thanks for your assistance, sorry when I looked on line calculators it said we would be able to borrow between £91,000 and £126,000. Am I correct in assuming my OH would have to be in employment for 6 months before this would be considered? Current mortgage is with Northern Rock so no option there.

ValHaller

kingstreet wrote: »

You'll definitely need a lender normally offering 5x income.

You might as well seek out a whole market broker now. It would be worth planning the approach now, even if you don't do anything until later in the year...

£112,000/£28,660 = 3.91? LTV = 83%

I agree about planning the approach

Racjam wrote: »

Thanks for your assistance, sorry when I looked on line calculators it said we would be able to borrow between £91,000 and £126,000. Am I correct in assuming my OH would have to be in employment for 6 months before this would be considered? Current mortgage is with Northern Rock so no option there.

You have a big plus right now, in that you have cleared your debts, so presumably you are holding it together for the moment?

You have 3 plusses coming hopefully

• OH gets another job
• Default off in November 2014
• Maternity and redundancy pay settled, which can come off the mortgage if need be.

I think it is probably worth waiting until 2 of those 3 plusses come up. If preliminary discussions with a broker indicate that you can get an acceptable deal on just your income, I would still wait for 2 of the 3 plusses, although if OH getting a job is one of them and the case is fine on just your income, I suggest that you should not wait for OH to be in the job for 6 months.

Racjam

Thank you that's very helpful. That is what I was guessing would be the best option but not 100% due to the high % on the mortgage currently. Yeah we can manage at present was just looking at options to us for some cost savings. It's amazing what you can do when forced to!

ValHaller

Racjam wrote: »

Thank you that's very helpful. That is what I was guessing would be the best option but not 100% due to the high % on the mortgage currently. Yeah we can manage at present was just looking at options to us for some cost savings. It's amazing what you can do when forced to!

Yes, it really makes sense to want to get a better deal. But if you are marginal with none of the plusses coming through, a decline could set you back for longer than it takes for the plusses to turn up! The brokers will have a better idea aboutthe default - at 5 years gone defaults seem to be let pass - but at £2000 this one is more serious than a silly mobile phone default.

Another approach could be to risk a fee and go for it now with just one attempt - all well and good if you are accepted - and leave it till the default falls off if you are rejected. I think the time between now and November may be enough for a rejection to fall from your record.

kingstreet

ValHaller wrote: »

£112,000/£28,660 = 3.91? LTV = 83%

Not high enough with two kids and a dependent spouse.

Try an online calculator for one of the less generous lenders. I can't get it to fit on 30 years with one of the most generous.