Should I Speak to Current Lender re New deal or Remortgage?

GGE

Hi, this is my first post but could do with some advice on how best to approach the situation. My self and my wife have an interest only mortgage with Lloyds on a historic 2.49% base rate linked rate. We would like to move to a new deal but we are fearful that the bank may ask questions about our repayment vehicle and possible look at our creditworthiness again as the mortgage was taken out around 9 years ago. We did have a smaller endowment to cover some of the borrowing but we sold this about 5 years ago due to debt problems. The other issue with this is that the debt problems have affected my credit score significantly although I earn more now than when we took the mortgage out whereas my wife does not work but we have maintained her very good credit rating. Any advice on what our lender is likely to do if we were to approach them with a request to move to a new deal would be greatly appreciated. Kind regards

GGE

sivs

Hi, If you are able to switch with your current provider they will not reform another credit check. They will only do this if you want to alter the term, borrow more money. In your post you mention debt problems so this will probably be the best option.

I would speak to your current lender and see what deals they have for existing customers..

Thrugelmir

Remortgaging will require a full application and involve a degree of cost. Also interest only (with no repayment vehicle) is likely not to be an available option.

Rather than switch products with Lloyds. Have you considered making overpayments on your existing mortgage instead. Being overpayments, they could simply be as much as you can afford on a monthly basis.

You don't say whether your debt problems are yet resolved. This may well impact on the options from Lloyds. As to switch you onto a repayment mortgage would require affordability checks. These are primarily to protect the lender although will obviously expose your own financial situation.

GGE

Many thanks. In terms of debts, we have around 2.5 years left on debt repayment plans to clear them and we intend to start over paying or starting an ISA in september when my wife goes back to work. We would just like to fix to a lower rate if possible without exposing ourselves to too much scrutiny at the moment. Increasing the term would be great but i suspect that would involve some credit discussions and we are worried that if we are not successful it might jeopardise our current deal if the bank finds out that we do not currently have a repayment plan in place. Regards

GGE

Spangled

It would help for you to disclose your outstanding mortgage balance and how many years left on the term. If you have a relatively small mortgage balance (say £50k), then switching to a new lower fixed deal - which may incur fees - wouldn't be such a good idea. And then you'd also be faced with a remortgage once the fix is up if you didn't want to stay on the SVR.

Also - is your existing deal BR+2.49% (giving a pay rate of 2.99%) or BR+1.99% (giving a pay rate of 2.49%)? If the latter, then that is in fact currently a fairly good rate for a lifetime tracker and might not be wise to give it up. A broker could run through all the options with you.

GGE

Thanks, we have 250K outstanding on a property worth 500K over 16 years and rate is BR+1.99%. I guess we've been through a few years of issues and coming through the other side now and want try to to do the best we can to give us a chance of paying as much of the outstanding amount off. Regards

GGE

Thrugelmir

GGE wrote: »

Many thanks. In terms of debts, we have around 2.5 years left on debt repayment plans to clear them

Depending on who the debts were with may limit your options in any event. Are the debt repayment plans on a frozen interest basis. If so, taking the cynical view. Repaying the mortgage is the option to take.

That's a sizable debt to be carrying on an interest only basis. As the months pass then repayment becomes higher and higher. Added to the fact that at some point of time in the future interest rates will rise. Which will make the mountain even bigger to climb. .

amnblog

A DMP is likely giving your credit file a severe hammering.

You are unlikely to get a rate to match what you have and interest only options are limited.

What are you hoping to do? Get a fixed rate?

Lloyds may give you a fixed rate but I would expect them to want to review your whole situation first.