New Mortgage Offer!

Crown

Hi all, Last month I posted a thread about how my current mortgage lender had inxreased my rate to a mind boggling 10.25% on a interest only mortgage.That thread can be found Here. I have been looking around and on advice of a friend contacted a broker who has got back to me with a lender offering me a rate of 5.34% Fixed for 3 years! altohugh they are charging me £970 in fees :mad:

This is excellent news as I am currently paying out £980 a month on my Mortgage and with this deal my repayments would drop to around £550 meaning of course I will be able to do some serious debtbusting. :j

I am wondering though if I should go back to a repayment mortgage what would mean that I am paying less than I am paying now but actually paying off my mortgage. I know in the long run capital repayment mortgages are the better option but I have worked out that by freeing up nearly £500 a month to throw at my debts I would bring my DFD forward by 5 Years although of course I will still owe £110,000 on the mortgage.

Anyone got any advice? My current thoughts are to stick with the interest only and try and save the money with the view to make a settlement offer to my creditors. If they were to accept a reduced amount I could be debt free within 2 years. On my last appointment with the CCCS they told me if I kept making jjust token payments it would take 124 years so of course this is a massive difference lol.

I have leant my lesson and am a real DFW Nerd, I will never use Credit cards again so no once I have cleared my unsecured debts I will pay of my Mortgage ASAP.

Am I doing the right thing?

rayday2

Sorry no help to you.

But well done and can I be cheeky? Was this broker local to you or is he able to do things via post etc?

We are in similar position I was with Future Morgages and they are a libor rated one - is your new deal non libor caus that is really interesting.

But well done to you!

rayday2

Hmm re-read your post, I would seriously think about as well as tackling your debts setting up a pay monthly ISA and that way you are covering a bit of your mortgage repayments. Just a thought.

It is important to bang debts down but it is also important to keep the longterm future in view too.

I am on a DMP and I save £25 emergency money a month into an ISA its my just incase fund.

hypno06

Hi Crown, first of all that is a pretty good result, so well done you! Just goes to show that by shopping around, big changes can be made.

I don't know if you saw, but on my diary a week or so back, we had a discussion about exactly the same thing - I am on interest only mortgage and having put everything including the mortgage in my snowball calculator I can be completely debt (and mortgage) free in an amazing 12 months if I keep up the level of repayment in total that I have now.

However, for others who posted, thinking that it would work for them, there was a comparison with consolidation - so lots of stuff to think about before making a decision. I am sure you will come to the right conclusion for you though. Good luck, and well done again!!

Crown

rayday2 wrote: »

Sorry no help to you.

But well done and can I be cheeky? Was this broker local to you or is he able to do things via post etc?

We are in similar position I was with Future Morgages and they are a libor rated one - is your new deal non libor caus that is really interesting.

But well done to you!

Hi RayDay, He works for a company so I dont think it would be a problem giving you his details. My friend had used him before to sort out some Buy to Let mortgages and the guy seems to know his stuff. I did ask on the mortgage board about the fees and was told that they do seem a little high when he will also probally receive payment from the lender.

I guess overall though I am making a fair old saving and as the old saying goes Beggars cant be choosers. Well thats true but I am going to save every penny I can

I will check if he minds me given out his details and if not I will PM you with it a little later

With regards to the ISA I was thinking about that but If I clear my unsecured debts I will change back to a repayment mortgage snowballing all the repayments into it.

Crown

hypno06 wrote: »

Hi Crown, first of all that is a pretty good result, so well done you! Just goes to show that by shopping around, big changes can be made.

I don't know if you saw, but on my diary a week or so back, we had a discussion about exactly the same thing - I am on interest only mortgage and having put everything including the mortgage in my snowball calculator I can be completely debt (and mortgage) free in an amazing 12 months if I keep up the level of repayment in total that I have now.

However, for others who posted, thinking that it would work for them, there was a comparison with consolidation - so lots of stuff to think about before making a decision. I am sure you will come to the right conclusion for you though. Good luck, and well done again!!

Thanks for that Hypno, I didnt see this on your diary although I have to say I havent been around as much as normal as Ive been hectic with work.(He says sitting wasting time surfing!) I will take a look back through your diary.

Cheers

lynzpower

I had an interest only mortgage with the Abbey ( before I sold) and this gave me the option of overpaying up to 200 a month ( i think) onto the capital.

This in retrospect was a cracking deal, as clearly I would never have been paying off anything like that off the balance if id been on a repapyment.

Ask whether you can make capital overpayments on the IO loan. if you can, Id pay off a min of 50 a month to show willing.

Burlesque_Babe

Well done!!!! I escaped my LIBOR mortgage with GMAC last month, it would have been pushing 9% with the last 2 rises in interest rate and I'm now on 5.44% fixed for 3 years.

rayday2

keren29 wrote: »

Well done!!!! I escaped my LIBOR mortgage with GMAC last month, it would have been pushing 9% with the last 2 rises in interest rate and I'm now on 5.44% fixed for 3 years.

Its the LIBOR bit that worries me with regard to mortgages but I feel with my crappy history I am stuck with it! We have never been behind in mortgage payments but do have a second mortgage too, there is equity in the property as well though.

Gemmzie

Dumb question - what's LIBOR mean?

Am looking to change our mortgage shortly

rayday2

Just found this brief explanation:

LIBOR Linked Mortgage - This is linked to LIBOR and the lender adds a fixed margin over this rate which is reset usually quarterly. The margin dependent on type of mortgage will vary but for a normal borrower is around 1-1.5%. LIBOR mortgages tend to have more interest rate changes than a normal mortgage. They may be beneficial where interest rates are relatively low and more expensive when interest rates are high.