Can't increase above 40% SO mortgage - next plans

AliceBanned

Thanks Trillain, that's helpful.


I had thought about doing that - repaying debts and then overpaying on the mortgage.


Guess I panic that full ownership is getting out of my reach, but maybe it's not. It can't continue to rise 10% a year in value for ever. I think I am stressed about this and many things today, including my job. Getting that news from the broker yesterday triggered depression again, but I will keep plugging away.


It's true, the interest on the low mortgage, especially when my fixed rate ends in August, will be relatively low. And I get to live in a nicer area than I could otherwise afford. I suppose I just need to try and remember the positives and not get too down.


Yes I have updated CV, done some training and applied for a few jobs but nothing is happening yet. :-(. Also looked at postgraduate courses. Think I just have too much on my plate all at once!

AliceBanned

Just thought of something else - when my finances improve a bit towards the end of this year, or if I decide to move out and buy non SO, would it be better for me to approach lenders directly?

I just find it hard to believe that I can't staircase at all, when I am only currently borrowing less than 2x my salary!

Thrugelmir

AliceBanned wrote: »

I just find it hard to believe that I can't staircase at all, when I am only currently borrowing less than 2x my salary!

Debt is debt. £10k is not an insignificant sum. As you admit yourself will take some years to clear. So the challenge is to find creative ways of reducing the amount owed as quickly as possibly. As it's the interest that you are paying that's causing the damage.

AliceBanned

Thanks Thrugelmir. I will work on this. I have been working on it for over a year but I could do more like take on a second job.

I have managed to switch some of the debt on to a 3 year 6.9% interest rate, and also switched current accounts. I am doing what I can to get onto decent rates so that I make enough headway more quickly.

No holidays, no clothes buying and I have stuck at this for a while and got used to it. So it is a matter of time really.

A few months ago I spoke to a Halifax mortgage adviser and he did say that they would 'possibly' lend me up to £160k if I came out of SO. So it seems strange that the loan is so much lower in a SO property - wondering whether to approach them directly again in August when my fixed rate comes to an end.

AliceBanned

Well I saw another Halifax mortgage adviser today as my fixed term is coming to an end. Not a great rate at 5.89% so I am glad to be on SVR soon.


The upshot is they won't lend me more than 85% of the 40% I currently own (I am at 71% LTV on a 40% share at the mo). So the adviser tried for overall lending, irrespective of property (ie 100% ownership) and despite a salary of £31,500 it came back at a loan of £60k!! I should have £25-30k deposit, depending on value when I sell my share. That isn't enough so I think I had better stay where I am for a year or more. She did think the credit rating might be the problem and I think that's probably the case, but it seems a bit harsh.


I have a secure job, no CCJs or defaults, some short term loans through a credit union (not at huge rates) and up to the limit on 4 credit cards but not due to extravagance; just taking me time to pay them all down, as between rent and mortgage at the mo it is costing me quite a lot.


Unsure whether to sell up anyway, rent for six months, use some of the equity to pay some of the cards, wait for credit rating to improve. Or stay where I am, because as the adviser said, I have made £11000 on it in just under 2 years anyway. Not sure but any advice would be welcome. I am not in a rush to move, I like it here. But am concerned about my longer term future.

Thrugelmir

Short term pain for long term gain springs to mind. Selling up and renting maybe the best option. As it gives you a clean slate to build up from. Once burdened with debt it can be difficult to repay the money in a timely manner. As there's the inevitability of some unforeseen financial outgoing or unexpected change in one's personal. Tacking the issue in a proactive manner will also make you feel better and lift the cloud of stress.

AliceBanned

Thanks. Yes I agree. One thing adviser did say is that the profit I've made on the flat is pretty good - that is the only thing possibly stopping me from selling up now (as well as the fact that I've not yet been here even two years) - as any additional profit will make up a bigger deposit. I don't anticipate staying in this situation too long but perhaps another year, still working as much as I can (with a second job this time if I can find one) travelling cheaply by bus/tube instead of train and pulling out all the stops. If it looks like I can't get on top of things then perhaps a period of renting, max six months as I am 47 now with an 18 year term left on my mortgage.


When the SVR comes in I will have an extra £50pm to go on the debt and I will try to maximise savings even more..that is definitely my goal and at least now I know where I stand. Really needs to get those debts down asap.


My loan to value is 71% at the moment and the mortgage adviser did say there are good deals on fixed rates but of course I would definitely need to feel I wanted to own property for the next two years, as if I sold up to rent I couldn't port the mortgage obviously. I really thought I'd be able to borrow maybe £100k and with the deposit I have get a cheap little one bed, but even that's not possible. Suppose on the plus side with a low mortgage the interest is less - I owe £51k.

AliceBanned

PS I agree about lifting the cloud of stress, but being out of the market in this area at the moment, which is rising fast, might increase my stress! Yes I'd have credit cards paid off but I might not get back on the ladder. So swings and roundabouts and I need to look closely at the figures again - I've managed to get my outgoings down and they will go down further by October as I'll have paid a couple of cards off..

Thrugelmir

AliceBanned wrote: »

PS I agree about lifting the cloud of stress, but being out of the market in this area at the moment, which is rising fast, might increase my stress! Yes I'd have credit cards paid off but I might not get back on the ladder. So swings and roundabouts and I need to look closely at the figures again - I've managed to get my outgoings down and they will go down further by October as I'll have paid a couple of cards off..

I'm not suggesting you make a hasty decision. Exploring all the options fully after giving plenty of thought. This may through up an opportunity further down the line. Having all your options open at least allows for the unexpected.

AliceBanned

Thrugelmir wrote: »

I'm not suggesting you make a hasty decision. Exploring all the options fully after giving plenty of thought. This may through up an opportunity further down the line. Having all your options open at least allows for the unexpected.

I know, it is helpful advice and it is better that I know exactly where I stand. Otherwise I might have spent some money on my flat (still have not curtains:eek: apart from the bedroom - but I'm on first floor not overlooked with trees outside). I can manage without life's little luxuries for a while longer.


But seriously, I do need to take my time, not least because of the upheaval of moving. I think that's why I've been investigating now, because for moving house I need to be thinking 1 or 2 years ahead, assessing the market, my debts etc over a bit of time until I feel certain of the best next step. Also I do really like the flat and area and I need the stability and emotional wellbeing etc - all that is on the up compared to earlier in this thread, I realise looking back at it now! Even though I'm fairly tied with these debts, I don't feel too 'burdened' as I know that won't help matters if I do anyway. There are always solutions..