Remortgage help

CariadBe40

Hi

We have been on a flexible rate interest only mortgage for 9 years now and have decided that we want to change to a fixed rate repayment.

Our current mortgage is with Santander and today we had an appointment with the Halifax (who we bank with) they have given us an amount that they can lend us but it is £5000 less than our outstanding mortgage. The advice we were given was to get a pay rise and go back in 3 months time.

I work for the public sector and a pay rise isn't an option and hasn't been for many years.

What should we do now? Should I speak to our current provider or will we face the same problem.

So frustrating when we got the mortgage we were earning a lot less than what we are today and have never missed or been late with a payment.

Thrugelmir

Post some numbers up and details of your mortgage then the resident brokers on the forum can comment.

CariadBe40

Our house is worth £240,000 our mortgage is for £160,000.

I earn £28,000 my husband earns £14,000

We want a 25 year term fixed for 5 years, repayment

Currently on a flexible rate (4.74) interest only

Credit rating isn't fantastic but not really bad either

kingstreet

Ask your existing lender what customer retention products it has from which you can choose.

Then contact an independent broker to look at your remortgage options.

Halifax rates aren't great, so you might find their decline actually helps you get a better deal.

CariadBe40

I have spoken to Santander and they have said we can have a fixed deal for 5 years at 3.69% but they will only do it over 33 years not 25.

33 years seems like a scary number to me but then again we can change that at the end of the 5 year deal.

kingstreet

The way to counteract affordability issues is to use a longer term. You can always voluntarily overpay upto the amount you would have paid each month for the shorter term and this will have the same result, the mortgage will be repaid in that preferred timescale.

The Mortgage Market review effects are felt by those with an existing mortgage who find some costs which were ignored previously are now part of the affordability calculations.

pinkteapot

CariadBe40 wrote: »

I have spoken to Santander and they have said we can have a fixed deal for 5 years at 3.69% but they will only do it over 33 years not 25.

33 years seems like a scary number to me but then again we can change that at the end of the 5 year deal.

You can change it before that (not formally) by overpaying.

If you take the mortgage over a longer term, the monthly repayments will be lower. Use the spare cash to overpay your mortgage, instead of spending it. This reduces the balance you owe and therefore the term. (n.b. during the fixed rate there'll be a limit to how much you can overpay by)

We took our mortgage out over 28 years (maximum HSBC would do) but are planning to pay it off in 14. :money:

The benefit to the longer term is that the standard monthly repayment is lower which is a bit of a buffer if life goes wrong somewhere.

What I'm saying is... Don't worry about that number. You're very unlikely to only ever make the 'minimum' monthly repayment and/or keep that house for the next 33 years.

CariadBe40

Thank you for the replies

Maybe a longer term is what we should go for.

It would help having slightly lower payments because for the first year we could use spare money to pay off our credit cards and then start making over payments on the mortgage.