Mortgage fixed rate ending but house on market - what to do!!

meljfin

Hi

We are currently with the Alliance and Leicester on a fixed rate mortgage that ends Jan 08. Current repayments are £867 a month which will go up to £1160 in January which we can't afford. A&L won't offer us any other mortgage apart from paying interest only for a while.

Our house is on the market as we are emmigrating but so far we've had no luck. Our dilema is do we do this interest only option in the hope that the house sells soon as we pay off the capital and move to Canada with the profit. But what if the house doesn't sell for a while and we've had say 12 months of paying interest only when we could have had a repayment mortgage and repaid some of the capital?

Our problem is that we can't afford to pay fees up front, can't be fixed or tied into any length of time in case we sell and wan't a good interest rate too.. i don't think we are ever going to find this and so any advice is welcome.

Thank you
Melanie

Xstyle

I think option of going Interest Only for while would be best option, and you're not tied into any length of time... IMO.

Maybe consider dropping your asking price just a little, for a quicker sale?

herbiesjp

Assuming your income allows, you may well be able to find fee free re-mortgage deals, that also do not have any tie-ins, so that they allow you the flexibility to leave without penalty

sarkin

Ask your lender if they have any fee free deals as well. Some lenders will do a traker rate with no fees that is cheaper than SVR

poppy10_2

If you are going abroad, just drop the price by 10% and get a quick sale. It will probably work out cheaper than continuing to pay the mortgage for the next twelve months and then having to sell at a lower price anyway.

MarkyMarkD

A&L won't offer us any other mortgage apart from paying interest only for a while.

What you are saying here is incorrect and doesn't make sense.A&L have a long list of mortgages available to existing customers: http://www.alliance-leicester.co.uk/mortgages/index.asp?page=all-rates&ct=existingcustomers&customertype=eremg including a lifetime BRT at 6.74% with no fees at all. As a short-term money-saving solution, this is probably cheaper and certainly easier than moving your mortgage elsewhere.

MortgageMamma

Have you taken "advice" direct from A & L? No disrespect to any A&L employees out there, but it may well be better to take some advice from a mortgage intermediary to see if there is a better product to suit your needs. A & L's staff can only advise on their products, there are literally thousands of other products on the market that could be much more suitable for you.

herbiesjp

meljfin wrote: »

Hi

We are currently with the Alliance and Leicester on a fixed rate mortgage that ends Jan 08. Current repayments are £867 a month which will go up to £1160 in January which we can't afford. A&L won't offer us any other mortgage apart from paying interest only for a while.

Our house is on the market as we are emmigrating but so far we've had no luck. Our dilema is do we do this interest only option in the hope that the house sells soon as we pay off the capital and move to Canada with the profit. But what if the house doesn't sell for a while and we've had say 12 months of paying interest only when we could have had a repayment mortgage and repaid some of the capital?

Our problem is that we can't afford to pay fees up front, can't be fixed or tied into any length of time in case we sell and wan't a good interest rate too.. i don't think we are ever going to find this and so any advice is welcome.

Thank you
Melanie

Have you managed to sort anything out?

MarkyMarkD

MortgageMamma wrote: »

Have you taken "advice" direct from A & L? No disrespect to any A&L employees out there, but it may well be better to take some advice from a mortgage intermediary to see if there is a better product to suit your needs. A & L's staff can only advise on their products, there are literally thousands of other products on the market that could be much more suitable for you.

Much as I hate to disagree with you, MM, I would find it hard to argue that it's worthwhile to remortgage for a matter of a couple of months whilst a property is on the market. Either the new rate is going to be unattractive if it includes free legals/no app fee/free val, or it's going to be attractive but involve substantial switching costs.

Obviously there are exceptions like the (frankly ridiculously priced) ING Direct deal which defy all logic, but I believe that what I say holds water in general.

So in summary, in the OP's circumstances:

- get the best switch deal with no ties your existing lender will offer; then
- compare it to the best (ludicrous giveaway) no-fees remortgage deals available in the market, and switch if you think it's worth the hassle.

But isn't ING Direct direct-only i.e. no procuration fee, so how much likelihood is there the average mortgage broker is going to recommend it? Maybe I should wash my mouth out for uttering such cynical thoughts.

Perspective

My advice would be to switch to I/O, ask the A&L if they can offer you any fees free Base Rate Trackers with no early repayment charges. This will seioulsy reduce your outgoings, you can overpay usually without penalty. You wouldnt pay much off the capital anyway before you sold. I wouldn't reduce your house price yet, certainly not by 10%, you dont give an indication of the house value but if its £150,000 that would equal £15,000, much better to switch deals with current lender and switch to I/O.
As a curved ball have you thought about re-mortgaging to release a little more cash for your next house and then letting the property? Simon

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You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.