Re mortgage query

Nicolapink

Hi, I have a house that is worth £125,000 approx. There is a mortgage on it of 62,500. It is with Santander. Interest only. In August 2017 this comes to an end.

I really need to sort this.

I have a poor credit score. I have an overdraft, and a catalogue account. £550.00 approx. And a Aqua credit card. Owe approx £1800, so 2,300 in total. There are a couple of defaults that are due to drop off my score in August this year. .

Stupidly I thought that I could just change over to a repayment mortgage, but it is a whole new application so I am in panic mode. I have approx 1000.00 to pay off the cards. And I'm on a tight budget to try to get myself out of this mess.

I suppose my question really is. To remortgage Do I need a deposit as well? Or is the loan to value ok on the house? Any tips for getting out of this mess would be appreciated. Would Santander extend the term to let me sort my finances? Is it worth asking? Sorry for all the questions! Credit score is saying poor so no one will want me ((

Thanks for reading guys, any response welcomed

MortgageMamma

Hi Nicola


You sound a bit overwhelmed with your predicament try not to worry.


You don't need a deposit to remortgage.
Y
ours debts aren't that high


You need someone to sit down, consider your income and debts/outgoings and calculate if a remortgage is viable for you. To do this you can either go to Santander or a mortgage broker. If you go to Santander they can only give you information not advice, if you go to a broker they can look at every lenders criteria for you, and place your remortgage with the most suitable lender for your circumstances.

If you are struggling to pay your debts you could consider consolidating them into the mortgage, but that means you would pay for them for longer and because of this pay more in the long run even though it would decrease your monthly outgoings.


The important thing here is to get proper advice, especially if you are struggling. Santander can only offer you their products which aren't normally the most competitive.

AnotherJoe

No you do not need a deposit. You already have more than £60k equity that in effect is your deposit. But, what is your salary because the fact you have an overdraft, credit card loans you aren't paying off, you previously had defaults, doesn't bode well for getting a mortgage because on the face of it you couldn't afford one.
Depending how old you are you could look at extending the term to reduce the repayments to something affordable.

Thrugelmir

No deposit is required.

Tackle your debts head on. Resolve these before applying for mortgage term extension. The time will allow your other credit history to age as well.

You say that your budget is tight. Is the mortgage affordable on a repayment basis? Just a thought. As much does depend on your personal circumstances.

Nicolapink

Hi everyone, thanks for your replies. I currently earn £16,800. I think I've lived a rather nice lifestyle for a long time LOL!

I just need to tighten my belt and stop buying clothes etc. I know it will be approx another £80 a month for my mortgage. And that's ok as I will have paid a good chunk of the debt off. I suppose I need to focus and get the cards cleared and overdraft.

Mortgage mamma I am overwhelmed.. Feel a bit stressed!

Phil_H_MLIA(dip)_Cert_PFS

As above but perhaps a little clearer..
£62,500/£125,000 is 1/2 so 50%. The lender uses the terminology Loan To Value, and a figure as low as this is virtually zero risk to the lender.
A few years ago that could have been the end of the discussion but with the implementation of the Mortgage Market Review lenders are now as worried about being seen as lending inappropriately as they are of the real risks to themselves.

Under recent changes the folk at Santander will no doubt state that they can offer "advice". Beware, the fact that they are restricted to their own products is not the biggest issue here.
Based on a recent meeting I attended with a client at another big high street name (obviously I cannot mention the name but it did have both a H and a X in) they will ask a series of closed questions to pigeon-hole you and then say "this is my advice"

So, obviously you are coming to the end of a rate deal.. Other than potentially requiring a shiny new rate, why do you wish to alter your actual mortgage "shape" ie from interest-only to repayment?

Obviously the term of the overall mortgage does not affect the interest-only calculations.

Nicolapink

At the time of taking out the mortgage, I got interest only as I was in a temporary post and was a ten year term. Which has a year and two months to go so I have to address it. I'm so stressed about it. Thank you for your patience with me x

Phil_H_MLIA(dip)_Cert_PFS

hi Nicola,
Often options are in front of you but it is not necessarily in the lender's best interests to fully explain them to you.
You will see in your original mortgage offer that you have the option to make overpayments.
I am not going to bother calculating the figures so bear with me and my 'made up' ones.

£62,500 @ 4% interest only is c. £200-£210pm
Assuming that switching to repayment was going to increase your payments by £100pm (ignore for the moment rate-swap) then one very simple and very flexible option is to call Santander, run through security etc and arrange to make "regular voluntary overpayments" of £100.
In effect you now have a repayment mortgage. If however, the proverbial should hit the fan in the future, then you have the option to pick up the phone and reduce or stop those over-payments without asking for permission.
Obviously if you did that for the long-term you could run out of mortgage term before running out of debt but as a short-term option it is considerably cleverer than not having the option available.

So, you could for instance, decide to wait another month or three whilst you reduce your other debt a little, then make payments of £50pm for a while again also reducing other debts, eventually once other debts are settled increasing payments to compensate for the months you paid less.

Eventually and probably not too far off, you should be able to gain a new rate deal.

Are you saying that your total mortgage term was set at 10 years and that you are almost 9 years in? Why 10 years - are you chronologically-gifted?

Nicolapink

Lol!! I think I was in denial. There was a plan to move again and to re mortgage however life took over and i buried my head in the sand... And went on holiday a lot !!

Nicolapink

Forgot to say... I'm 42, 43 next month Lol Phil very pc

Phil_H_MLIA(dip)_Cert_PFS

Top tip, irrespective of your true plans, always but always contract for the longest mortgage term that the lender will offer as this ensures maximum flexibility.
Some, including the FCA as it happens, would state that you should never extend a mortgage term for longer than the minimum you can reasonably afford.
Obviously if you elect to make the voluntary payments then that is all BS.
In the older days of mortgage advice and The Council of Mortgage Lenders code of mortgage lending practice (yes really) one of an advisers key considerations was flexibility but the FCA et al seem to have forgotten that.

As it happens, subject to your own intentions and job type etc Santander will allow a mortgage to age 75. Don't forget this is merely your contracted term and largely irrelevant as a maximum.