Coventry MOREgage

kateharv

Hi everyone

I'm wondering if you can help at all as I'm a bit confused as to our situation in regards to the above mortgage.

We bought our house in September last year for £108,000 as first time buyers using the Coventry Moregage product. The secured mortgage on the house is for 95% of the value. We then have an unsecured personal loan taken out with the mortgage which is for the same rate and terms of the mortgage. This is for a little over 5% of the value of the house as the arrangement fees and solicitors fees was included in these. All together (loan and mortage) we borrowed £111,000 against a £108,000 house.

Now the question I have is that if we choose to remortgage when our fixed interest rate expires in June 09 what will the situation be with the unsecured loan part? Will we be able to keep the loan part with the coventry and therefore expand our options with the rest of the mortgage market as we won't be looking for 100%?

Obviously the mortgage market is getting tougher and I'm just wondering what our best options will be when our fixed term runs out.

We are currently rennovating the house as we can (new kitchen, new bathroom, new boiler, new water system, getting rid of the evil artex etc), but I'm beginning to realise this may all be wasted money the way the housing market seems to be going!

Thanks for your help.

silvercar

Northern Rock used to do a together mortgage on the same principle, if you moved the mortgage the interest rate on the unsecured part shot up, to something like 17%. I don't know if the Coventry have the same policy, but I can't imagine them being happy to have unsecured loans at mortgage rates if they don't have your mortgage business.

Any lender will look at your overall borrowing level when offering you a mortgage, so the fact that you only want 95% of the value but also have an unsecured loan will need to be disclosed.

At least the Coventry will allow you to move to any deal offered to new customers when it is time to remortgage, unlike some lenders.

poppy10_2

Coventry's Moregage had no ERC on the unsecured loan.

MarkyMarkD

The rate increase for NR (and other lenders') unsecured element of their Together/Plus/whatever package isn't an ERC, as such, it's a penal rate to discourage people from moving the secured and leaving the unsecured behind.

Regarding the OP's question, having a big unsecured debt is going to hamper your remortgaging capability, purely on income affordability grounds. So I wouldn't assume it will be easy to remortgage with the unsecured loan sitting with Coventry.

And I'm surprised if poppy10 is correct in suggesting Coventry will allow you to keep the unsecured part with them without charging a higher rate.

I work with someone who used to work for the Coventry so I shall ask the question tomorrow morning.

drrobert

You've got over a year before your current mortgage deal runs out. Credit will remain difficult to get next year, but I think it's likely that we'll see government intervention to help people with negative equity or near-100% mortgages.

There's no need to panic now, but you must pay off as much of your debt as possible before June 2009! Try to at least pay off the loan component of your borrowings, and don't take on any more debt, whatever you do! The more of your debt you can pay off, the better your chance of getting a decent remortgage deal next year.

By all means redecorate your house, but don't spend lots of money on it and don't expect the value to rise over the next couple of years.

neverdespairgirl

drrobert wrote: »

Credit will remain difficult to get next year, but I think it's likely that we'll see government intervention to help people with negative equity or near-100% mortgages.

I doubt it - and if it did happen, it would seriously !!!! me off.

homer_j_3

I think the best we will see is the re-introduction of these products on a remortgage basis only. That could be a couple of years off.

MarkyMarkD

My colleague has confirmed that Coventry charge an extra amount - he thinks 5% - on the unsecured rate, if you redeem the secured part of your MOREgage.

silvercar

So you have 102k mortgage and 9k unsecured loan. Steps to take:

1. See what coventry will offer you in terms of a mortgage deal on the 102k. One phone call to coventry should sort this.

2. See what deal you can get elsewhere, allowing for the interest rate on your secured loan to increase by 5% as a cost.

I suspect that, as coventry allow you to access any deal available to new customers, the extra costs of the secured loan together with any fees associated with getting a decent deal elsewhere, will mean it unlikely you will get a better deal by moving your mortgage.

MarkyMarkD

I don't think it works like that.

If you have a Together/Plus/MOREgage, and the lender has ceased offering them to new borrowers, I don't think that existing borrowers can switch the mortgage bit (alone) to a new borrower Prime product.

Other threads about NR have certainly implied that this is the case.