Mortgage Advice Needed

Birdie1985

Hi

After some opinion on our current situation which i'll try and explain now - hopefully without too much waffle!

My DH and I bought a house in March 2007 for £117,500. We had a 5% deposit but added the fees to the mortgage and had to pay a higher lending charge, so our total mortgage was £114,144. My ex boyfriend had left me in a very bad financial situation (another story!) in 2004 and I had owed £17,000 which i had managed to pay the majority off befor we took out the mortgage, but as a result i had an adverse credit history so our mortgage options were reduced. On top of that DH was under 21 and self employed.....you get the picture.

Anyway, our mortgage is with First National (GE Capital) and is interest only at the moment, 6.39% fixed until march 2009. We have an £8000 early repayment charge before march 2009.

Fast Forward to June 2007, DH gets offered good job in Cumbria and so he stays up there during the week and comes home weekends which is fine until December 2007 - i'm 6 months pregnant and made redundant at work (another story again) so we can no longer afford to pay to live in separate places. I have moved up to Cumbria and we are renting a house for £400 a month. We have rented our house out for £450 a month so effectively we're topping up our mortgage by £150.

Our mortgage is not portable, but the mortgage company will be negotiable on this - details i'm yet to find out.

I have spoken with the agents back home and they have said they would put it on the market for £127,000, looking to achieve from around £124,000. Prices in Cumbria are still cheaper and the house we rent at the moment we could buy for around £90,000 - would we be better to sell our house and buy somewhere up here on the theory that we could buy for £90,000, have a mortgage of no more than £82,000 better LTV and could be paying a repayment mortgage for less than the interest only we are paying now - or should we just wait and see what's going on with the market in March next year - my concern being that I was earning more money when we took out the mortgage originally and what with having little feet coming along soon i'm not neccesarily going to get back to that wage for a while....

Sorry for the mammoth post - hope it makes sense and that i'm not being dumb.........any advice gratefully recieved!

Gorgeous_George

I would recommend selling the loss-making BTL and porting the mortgage if possible. Paying the early repayment fee may hurt just now but that is nothing to the pain falling prices will mean to you.

I'd also suggest that renting may be better in Cumbria if the current mortgage cannot be ported. This will give you time to save a larger deposit and will protect you from the expenses associated with home-ownership.

Good luck with whatever you decide.

GG

MortgageMamma

You have an ERC of 8k, and are topping up the rent by 150 a month which is £1,800 between now and when you can redeem mortgages without paying 8k.

Can you afford to keep topping up the rent> if so that might be the best option because if you sell you have to swallow the 8k, plus agents selling fees (about 1.5%) and then solicitors fee's £750 say)

First National in my experience have never been known to Port, if you can get them to port then thats good but if you take a mortgage of 90K then you will still have an early repayment charge to pay on your existing mortgage balance minus 90k.

If I was you I'd seek some professional advice for this before making your decisions

MM

UK007BullDog

MM is right, You need to look at all options, because whatever you do it will incur costs.

Birdie1985

Thanks for the replies, topping up the mortgage isn't a problem, I suppose I was banking on the idea that First National would waiver/reduce the ERC on the basis that we had to take another mortgage with them - is this something that happens? Still waiting to hear back from our mortgage advisor........

UK007BullDog

No, they will not offer you a deal.

Birdie1985

Oh well, thats the end of that then! not worth swallowing 8k for the sake of £1800!
cheers

MortgageMamma

Bulldog is right. they won't do it. keep renting it out for 12 months then sell if you need too. 12 months will pass by really quickly. hang in there and come back for advice in future.

Good luck with the baby.

MM

Birdie1985

Cheers! Have had a long chat with Mortgage Advisor today and he has said the same, keep hold of it for now and don't do anything yet, so that's what we'll do then!

Thanks for the help...:j