Can you please tell me what to do?

JBJRN

I currently have a 50% share ownership property in my name - paying £421 p/m on a 6.49% fixed until 05/10 – about 20 years mortgage years remaining. My partner and I have a joint income of £57K and want to buy the other half from the housing association. The property was valued about 18mnths ago for £166K - 83K for the HA and £83K for my share – this leaves with me an equity of £27K as I have £56K left on my 50% share.

Because of a disputed debit of £5K which resulted in a CCJ and a default on my credit record – I have now satisfied the debt (final settlement of £3K). My current lender has turned me down to increase my mortgage to £139K and buy the whole property. London & County have come up with a deal @ 7% fixed two years and is non portable with a £995 arrangement fee.

There is an ERP on my 50% mortgage before;

31/05/08 = £3,056
31//05/09 = £2,445
31/05/10 = £1,833

My rent/service charge from April 08 has been increased to £177 p/m.

My question is;

Should I go ahead and buy the other half now, after May08, after May 09 or wait until the ERP ends in May 2010? I know I have to come up with the £995 arrangement fee + other additions cost including the ERP

However, this should save me the £177p/m I currently pay to the HA and provide me with a piece of mind of owning the whole property.

We have no other debt at present – apart from the mortgage.

Points to take in account;

• Should I wait until the end of my current deal – I would have paid a total of £4,777 rent to the HA
• A Mortgage of £139K on repayment will cost me around £1,030 p/m whilst my current 50% mortgage + rent will cost me around £600 – a massive £400 extra a month – but based on wages and no debt we can easily afford this.

Sorry for the long post but what would you do?

UK007BullDog

The rate is quite high for the new mortgage. I would wait until 2010 to put some distance on your CCJ (creditfile) to get a better rate and not to pay any ERC's.

Save like crazy to increase your deposit. Then buy the rest of the shares in 2010. As long as you pay your mortgage and rent no one can take the property from you (except for an earthquake or loss of income if not protected) so no need to worry.

JBJRN

Thanks Bulldog - you're indeed a very wise guy. I will do exactly as you suggested - thanks very much. We started saving last month £700 p/m into two ISAs - so will continue doind so until May2010. :beer:

Just another question;

On my current mortgage I am allowed to overpay each year upto 10% of remaining balance - so at the end of May this year I can overpay in excess of £5K. Should I do that or leave it on our ISAs whiich is currently paying 5.6% interest - the mortgage is 6.49%?

UK007BullDog

Stick it on the mortgage. You can set up a monthly standing order and make sure you change it every year not to be hit with overpayment charges. Call up the lender to get them to tell you how much you can overpay without incurring any chages every month.

I think I need to change my name. I am a gal, well not really, age wise I am a little bit past a gal .... LOL

JBJRN

Whatever you are you are brilliant because I have seen your other posts/threads and you are always up for giving very good and sensible advice - So thanks a lot Madam

I was just reading the other thread you and Edinvestor started about A&L ISA's - wow my Halifax ISA pays me us mere 5.25% (we have just checked both internet banking accounts). Over 6% seems like a very good deal - we will be applying for the A&L ISA for 08/09 financial year and get rid of our Halifax ISAs . We will then put any leftovers after making the 10% mortgage overpayments into the A&L ISAs.

Once again Many Thanks

UK007BullDog

Thank you for compliment. Made my day!

To get that 10% A&L you need to bank with them. Make sure you read their small print because if you dont fit the billyou wont get it. Alternatively look at Barclays tax haven ISA at 6.5%. Which was also recommended by Martin.