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

AliceBanned

Having thought through things a bit more and looking at my budget, I'm wondering whether getting rid of a Littlewoods account would help. I have 4 credit cards (just closed one) and owe about £200 to Littlewoods with a credit limit of £2000. I know I won't spend that but I am occasionally tempted to buy the odd item of clothing in the sale. Would my credit rating improve with no mail order accounts at all?


If so I will close that and another one that I have as I can pay the balances off in the next two months.


I am slightly baffled that my mortgage opportunities are so low, though I sort of understand. I watched a programme last night about bailiffs and someone was evicted from his SO home because he had massive credit card debt - way more than mine but it is scarey so I am trying to get a grip and at least get it down to £4k before I apply again. And then get it down lower than that - I would be comfortable with around £3k on 0% finance but at that point I'll be overpaying my mortgage and working on savings.


I think Halifax would offer me a reasonable fixed rate deal (about 2% or even less) and that way my mortgage would be £100pm less than it is now. So that would help with the debts.


Thanks for any advice. I know it is all about repaying the debts and never withdrawing cash on CCs etc (I did a lot last year and earlier this year!:o) but on top of that any 'management' type things I can do, eg closing accounts, limiting available credit etc would help as it may get me better deals on my current balances or new 0% deals eventually.

AliceBanned

One good thing is according to me trying online via Halifax just now, I can fix for two years at 2.54%, taking my mortgage monthly payment down from £374 to £290. I think that is pretty good.


I am uncertain about fixing as I keep thinking I might sell up etc but really financially I'd be better off not selling up and spending two years repaying my debts -or as much as possible, maybe then looking at my options.


So hard making longer term decisions - even two years as I'm not very good at it! But as my phone contract also comes to an end in August, that would give me in total £130pm more to repay my debts. I wonder whether I can make savings anywhere else.


I would appreciate advice on fixing or not - Halifax SVR is 3.99 % at the moment. I guess it is a good time to fix?

libf

Look at what the penalty would be to leave the fix. Generally on a shared ownership mortgage they're not prohibitive as the mortgage amount is relatively small.

Also, if you're struggling to staircase then would you get a mortgage for a Mon shared ownership property? Is it cheaper to stay where you are than rent privately? If so it makes sense to stay put, at the cheapest rate you can.

AliceBanned

libf wrote: »

Look at what the penalty would be to leave the fix. Generally on a shared ownership mortgage they're not prohibitive as the mortgage amount is relatively small.

Also, if you're struggling to staircase then would you get a mortgage for a Mon shared ownership property? Is it cheaper to stay where you are than rent privately? If so it makes sense to stay put, at the cheapest rate you can.

Thanks no I can't borrow enough for non shared ownership in this area. Nothing close to enough.


It would be cheaper to rent, maybe £150pm for the same flat or a lot cheaper for a house share. Not sure it's worth the hassle, especially as values are rising so probably not. Also no fees for the fixed rate and I paid about £1200 for fixing when I first bought the place - not to mention the solicitors' fees etc. I think I will stay put but look at the penalties first before I fix.

AliceBanned

Just before I go ahead - will the mortgage advisor in the branch give me the same rate as via Halifax website? It seems quite a good deal. An independent broker hasn't so far been able to help.


Thanks

Loopy28

Why not fix your 40% share for 2 years so you get a low rate but are only tied in for two years. You can then use the savings towards clearing down your debt over the next two years.

Presumably staircasing to 100% would also have increased your mortgage payments to higher than what your 40% mortgage plus rent is? So you can also put that in to the pot towards clearing your debts.

This way you might come out the other end in two years with your debt cleared and off your fixed rate to be able to staircase at that point.

If you move out and rent, all money is being 'thrown away' at least by staying put you are still building equity through your 40% repayments and will have that in your favour as well.

AliceBanned

Loopy28 wrote: »

Why not fix your 40% share for 2 years so you get a low rate but are only tied in for two years. You can then use the savings towards clearing down your debt over the next two years.

Presumably staircasing to 100% would also have increased your mortgage payments to higher than what your 40% mortgage plus rent is? So you can also put that in to the pot towards clearing your debts.

This way you might come out the other end in two years with your debt cleared and off your fixed rate to be able to staircase at that point.

If you move out and rent, all money is being 'thrown away' at least by staying put you are still building equity through your 40% repayments and will have that in your favour as well.

Thanks Loopy28 and everyone. This is what I decided to do, and last night I applied for the new mortgage product online (2.54% which is pretty good). At least I know where i stand for the next two years, don't need to move house and have slightly lower outgoings. Not sure I can repay all the debt in two years but I can have a go at shifting a good amount. There was also an option to fix for 4 years at 3.99% but I think that is too long for me. The exit charge is only 3% within 2 years, and 1.75% within 1 year. My term comes to an end on 31 August so it looks like my rate will reduce one month early, as I am able to switch within 3 months of the end of the term without penalty.

Also house prices are going up fast in the area, and I only have an 18 year term on my mortgage so I need to stay in home ownership if I can, to manage to own something by retirement.

Thanks for the advice.

AliceBanned

Hello. Due to a glitch in the system I was not able to put the product transfer through online. After a couple of days querying it was resolved and a couple of days after that I tried again.


It turns out the delay worked in my favour, as I am now on a rate of 1.99%. It is nearly £100 saving per month for me to put towards the debts. . I fixed for two years but even if I wanted to say sell up and rent a place after a year, the fee for leaving is only 1.5% of the balance - about £600. So it was worth fixing for two years. There was an option of 4 years but I don't feel sure enough about what I want to do yet so am happy with the two year fix - no fees! No moving costs and all these things that I was pondering but can't afford anyway!

libf

Glad it worked out for you. Use that £100/month wisely!

AliceBanned

libf wrote: »

Glad it worked out for you. Use that £100/month wisely!

Thank you. I will - extra money has been a long time coming!