Changing mortgage term whilst on DMP

beckstar1975

Hello

We are currently on a Nationwide mortgage on SVR (I think - currently 2.5%) as our fixed term ran out a while ago.

We are also in a large DMP - which we hope to have paid off in 2-3 years (see siggie below). We are wanting to switch to a 5 year fix during which we hope to pay off the DMP and second mortgage we took out with Nemo too (10.7% interest - ouch).

We have 22 years left on our mortgage but playing with the figures could shorted the term by a few years for only slightly more a month (ie have paid off £5k more over the five years).

We have been advised that switching to a fixed should be straightforward, but that shortening our term would require going through affordability checks.

Is it worth going through all the hassle for the sake of only £5k - or better to just switch product only? LTV is approx 53% - we hope to remortgage for significant work when the 5 years are up and our credit rating hopefully improved. Is it worth us talking to a broker about other products, or are we a hopeless case?

Many thanks

Rebecca

Farmerbob

I'd be concentrating on the DMP & 2nd Charge, before considering paying more to your mortgage. Once that's cleared then you can make more headway into paying down the mortgage.

Hopefully the extra you would have paid each month to reduce the term can reduce the amount of time on the DMP helping you get on right track sooner.

Thrugelmir

In a DMP there's no possibility of remortgaging to another lender.

Personally I would remain on the SVR. Scrimp and save to clear the DMP as quickly as possible. Then tackle the secured loan.

No easy answers.

beckstar1975

Thanks - I think we'll fix for 5 years anyway as it's only £14 a month more at 2.74% a month, and then I won't have to stress when rates rise - but will leave the term as is and chuck extra money at the DMP/2nd charge.

Cheers

Rebecca

Thrugelmir

beckstar1975 wrote: »

Thanks - I think we'll fix for 5 years anyway as it's only £14 a month more at 2.74% a month, and then I won't have to stress when rates rise - but will leave the term as is and chuck extra money at the DMP/2nd charge.

Cheers

Rebecca

You'll lose the BMR rate for ever. The rate you'll move onto is the SMR at 3.99%.

beckstar1975

We would - but we have been lucky having had it for the past 4 years at rock bottom, a rise of 1% would be more than the fix would be - aren't we better just being gracious for what we've had and then fixing for 5 years whilst we pay off everything else, big rises could really scupper our ability to pay off everything else.

Our kids are currently 9, 8 and 6 - in 5 years time we are REALLY going to need to convert the loft so they have their own space (currently boy and girl sharing one room and the little boy in box room) - so paying everything off and knowing what we owe to who is preferable over getting the slightly lower rate.

Am I taking too short-term a view?

Cheers