Mortgage help please.

ajbrynoffa

We took out a mortgage with the Chelsea 2 years ago.We bought our ex council house for £45000 and repayments were on a low interest rate for 2 years with payments of £239 per month.The low interest period is up next months and we`ve had a letter saying that interest will now be charged at the Chelseas base rate of 6.7% thus putting payments up to £339 per month which we really can`t afford!We have nevr missed a payment on the £239 but will really struggle to pay the £339.The question is has anyone got any advice on what we can do if anything?we can`t remortgage for another 12 months with it being an ex council property.

Ember999

ajbrynoffa wrote:

We took out a mortgage with the Chelsea 2 years ago.We bought our ex council house for £45000 and repayments were on a low interest rate for 2 years with payments of £239 per month.The low interest period is up next months and we`ve had a letter saying that interest will now be charged at the Chelseas base rate of 6.7% thus putting payments up to £339 per month which we really can`t afford!We have nevr missed a payment on the £239 but will really struggle to pay the £339.The question is has anyone got any advice on what we can do if anything?we can`t remortgage for another 12 months with it being an ex council property.

Having never bought an ex-council house before, I know nothing about the rules but if you say that you cannot re-mortgage for another 12 months due to it being an ex-council house, then you have only 1 option.

You must pay your mortage or you risk losing your home! Therefore, you must cut your living expenses to enable you to find the extra £100 a month you require to meet your mortgage payment. This can be done with a little thought and budgeting. At the end of the day, it works out at only £25 a week you have to find extra.

If you post all your income and outgoings on here, the dedicated team of MSE Experts will help you find that £25. Cutting your shopping budget by buying cheaper food, less processed food, cutting out take-aways etc, is a big help in reducing shopping budget.

Do you have Sky TV or any other pay service that you can cancel to raise the money? Can you do any over-time at work?

You do need to find this money as I am sure you can appreciate not paying your mortgage has severe consequences for you, your family and your future.

Do you have any other debts?

Post your 'Statement of Affairs' and everyone will see what they can do to help.

Above all, don't worry! You can sort this minor glitch with a little thought and help from here.

Good for you getting on the property ladder, just ensure you stay there now

mancitychick

Normally when you buy a council house, you cannot sell it for the first three years. If you do, you have to pay back all the discount to the council.

However I do not see why you could not remortgage (unless Chelsea have a tie-in on your exsisting mortgage) before the three years is up, as you are not selling the property the council will not be looking for there discount back.

Conrad

ajbrynoffa wrote:

We took out a mortgage with the Chelsea 2 years ago.We bought our ex council house for £45000 and repayments were on a low interest rate for 2 years with payments of £239 per month.The low interest period is up next months and we`ve had a letter saying that interest will now be charged at the Chelseas base rate of 6.7% thus putting payments up to £339 per month which we really can`t afford!We have nevr missed a payment on the £239 but will really struggle to pay the £339.The question is has anyone got any advice on what we can do if anything?we can`t remortgage for another 12 months with it being an ex council property.

It is perfectly straightforward to remo during the 3 year pre - emption period, unless your local authority dis - allow this which I think is unlikely.

By remortgaging you will incurr fee's and interim interest (people always get caught by this). There are very few fees free deals about now due to the costs of regulation IMO.

Note, many lenders do not to Right To Buy property. As a broker I urge you to seek an alternative rate with Chelsea before comitting to a remo.

Scott

Why don't you just see about getting your lender to put you onto a new product?

Lenders are DYING to make sure people stay with them (it's 7 times cheaper to retain your business), so see if they have a Customer Loyalty/Retention team or something.

It isn't a remortgage, but you get a new product.

ajbrynoffa

ok following the advice i got in touch with the Chelsea and they tell me that I qualify for other products,the fee for switching is £175 in all cases but now i`m confused as to what product to switch to in order to keep repayments relatively low.Here are some of the products on offer................
fixed rate till 2007 with cashback...4.85% then moving to 6.74%
Fixed rate till 2008 with cashback..4.95% then moving to 6.74%
fixed rate till 2010 with cashback...5.05% then moving to 6.74%

2 year tracker @4.99%
3 year tracker @5.14%

2 year discount@5.19%
3 year discount@5.19%

So bearing in mind that my payments would be £339 at 6.74% which would be my best option and what would my payments be during the low rate term............sorry for being thick!!.............cheers.

abc

This is a mortgage calculator that should help you get some figures, or give the Chelsea a call and ask them to send you out some quotes of what the repayments would be on the various options.

http://money.guardian.co.uk/calculator/form/0,1456,603156,00.html

If you are worried about your payments increasing over the next few years then you may be best suited to getting a fixed rate for as long a period as possible.

On the other hand if you believe interest rates will come down and you are prepared to accept the risk that they may go up then you could go for a discount or tracker.

You also need to check for any redemption penalites should you wish to sell or remortgage during the fixed/discount/tracker term, and also if there are any extended redemption penalites beyond this period.

MarkyMarkD

Given that your mortgage is relatively small, it's probably worth staying with the same lender. The £175 fee for switching works out at almost 0.2% per annum on a two year product, so once you factor in that fee the 2, 3 and 5 year fixes cost around the same amount: you aren't paying as much extra for the longer term ones as it first appears.

(2 year = 4.85% + 0.20% = 5.05%, 3 year = 4.95% + 0.13% = 5.08%, 5 year = 5.05% + 0.08% = 5.13%)

ajbrynoffa

ok thanks for all your help.....i think i`ll probably go with the longer fixed rate which gives us chan ce to sort things out...........thanks again