Due for remortgage Feb 2009 - best options?

bonehead13

Hi
My current NR fixed rate expires in Feb 09, to pull out now and get a new deal elsewhere will incur fees of approx £4k. With all the media reports etc predicting things will get much worse in the mortgage market, is it worth paying for an early release to secure a deal that might be massively better value than what might be available at the end of this year?? The other issue is if we wait and deals become even more difficult to obtain, is there a significant risk that we will be refused a mortgage? We will need £180k against a house worth approx £290k at present (we think! assuming the lender gives a fair valuation). Single income is £40k, wife currently on maternity leave but will prob be part time by then, £10k basic, £5k commission. I appreciate the unpredictability of the housing / mortgage market but any opinions would be welcome as it's a major worry at present, cheers

going2die_rich

9 months away is a bit difficult to predict, especially in todays climate. You'll either hear from the doom and gloom people saying it's all about to crash and then the other side saying it's just a slowing.

I personally wouldn't pay an early release of £4k for something that in 9 months could be on it's way to being sorted.

Your house now has £110k equity, so even if a "crash" was to occur, you'd still be around £75k or more in equity. Which means to banks you have a good sized deposit. You would be borrowing 4.5 times your salary, but with your equity, I think the banks would still lend you it, as they have the £75k buffer.

If you are worried, I'd say tighten your belts now and save up for them 9 months, with the aim to be able to put money down on the mortgage reduction when looking else where. Which can only help. If it was me, I'd go with the cut back and save route, instead of jumping ship now in a blind panic from media reports that always push what sells papers, which doesn't mean its all true.

preston99

I'm in a similar position (albeit lower LTV and loan amount) and I don't intend moving until the end of my fixed term.

I would definately look at saving some cash to reduce the LTV when you switch just to be safe.. I'm not a doom & gloom merchant but I'm fairly confident that house prices will be lower this time next year.

bonehead13

Thanks going2die_rich, that's the way i think we should go, the wife is a worrier though and is always looking for financial stability! i agree about the media, everything in this country seems to be hyped up far too much, it is difficult to separate reliable fact from media hype

inthe80s

i wouldnt worry to much in your situation, mainly because you have a relatively high LTV, the real danger is for the people with 95%-100% mortgages.