End of fixed rate with non-mortgage debt problems help!

hobbesy_2

Our current mortgage deal with Northern Rock comes to an end at the end of September this year. This was our first mortgage and everything was dealt with by our broker so never really got to grips with the facts and figures, we were just glad to get a mortgage.

We have just received a letter saying interest after this will be charged on the mortgage at a rate below their SVR as detailed in our offer and our monthly mortgage repayment will increase (doesn't say how much, would have to work that out i guess.)

They have outlined 3 new things we can switch to, which i'll give the figures for in a minute. My concern is that since moving here we have finally got to grips with some big debt problems and are now on a repayment plan with Payplan through National Debtline. We therefore are steadily gaining defaults, etc I suspect as the repayment offers go through. We have never been late with a single mortgage payment but I know no other lender will really touch us with a bargepole til we are debt free. Will Northern Rock also want to redo checks on us to switch our mortgage to a new fixed rate?

If we can go ahead these are what they are offering -

2 year fixed - 5.99% (overall cost for comparison 7.0%apr)
3 year fixed - 5.99% (comparison cost - 6.9%apr)
5 year fixed - 5.99% (comparison cost 6.8%apr)

from the little i've read i'm guessing these aren't fantastic rates but better than we'll get with someone specialising in poor credit mortgages.

Arrangment fee and mortgage review fee comes to £945, which can be put on the mortgage. And you can also take a furth £1000 'help with costs' to spend as you wish, but i'm guessing thats just putting another £1000 on your mortgage too.

The mortgage is a few thousand of £100k to make sums easy, and as we've only been here two years not far off 100% apart from house price increase

I can ring and discuss options with them, but should i be mentioning to them we have debt problems if they've done no further checks and don't know. I'm guessing the worst they can do is make us take a crappy higher rate, but i also guess thats a bad option

thank you thank you if you've got this far. I just really want to make the right choices if we're ever going to get back on the right track

Keri -x-

payless

Am I right in assuming like you had a 100% ( or more ?) "together mortgage"- which is a mortgage and loan

At the time appears you also had some large debts, which I assume you were upto date with, and now repaying at a slower than originally agreed

On one side I would ask why did you buy if you had so much debt ?

If you took "help with costs" orginally that will need to be repaid ( or added to loan?) if you did not meet the original commitment ( applies if moving to new lender or swapping rates internally) - believe they used to add the years tie on, but don't think they do that any more

If you take it again , thats another 3.5 yrs tie on the £1000 ( but not added to loan at this stage - they are already adding those fees !!)

IF you have any equity from repayments , house price increase or poss even by spliting the mortgage and loan ( I assume this can be done ?)
then might be worth trying a new lender, but Yes defaults might blow you out , as would if your commitments were deemed to be too high

Existing lender would not normally require any info about current credit / income status if you are just swapping rates

meanmachine_2

Can I ask what rate you fixed at previously?

5.99% doesn't sound too bad, given your other debts. But if you have been keeping up payments, I doubt they'll check your credit again.

Other, more knowledgeable, people on here will be able to answer that for you.

hobbesy_2

We were up to date with all loans, etc when we took out the mortgage with hubby working full-time and i was on maternity leave. Debt problems spiralled when i got severe post-natal depression around the time we moved house. We went ahead with the move as there was so much money tied up in it already, and thought it would be a short term problem. It caused problems for quite a while and although i have now returned to work it is at a much lower rate/number of hours, and in the mean time the debt problems increased just trying to stay alive.

Yes it is a together mortgage. I'm happy to take the 5.99 rate to be honest. Have no real interest in getting another £1000 of them to be added to the loan, was just mentioning it as it was in the letter. So my main concern I guess is just if they will credit check us again to switch rates over

many many thanks

Keri -x-

payless

As I said , I believe the NEW £1000 will only get added if you leave within the next 3.5 yrs ( check with them) so likely worth taking anyway if sticking with them