What should I do.......

colorado

Hi folks

This is my first thread and I hope you can give me some hope:

• We are on 2nd marriages and now have 2 young children
• I went back to school and have doubled my salary in 5 years
• We ended up using most of our equity to settle big divorce debts
• We are now virtually debt-free apart from huge mortgage of £220k
• We have had to go interest-only for the last 5 years
• Current deal ends in May 09 with large redemption penalty
• Problem is while I now earn circa £50k and wife circa £9k we have virtually no equity and I will be 42 years old when I go to apply for repayment mortgage next year
• We need to move anyway as this house is now unsuitable
• All this has been worrying me sick even before the current situation and the small amount of equity we do have may just be enough to cushion against negative equity

We have done a lot to improve our situation but I'm scared it is too late mortgage wise.

Any thoughts would be very welcome - and Thank you in advance.

KiKi

Hi there

Firstly, welcome to the forum.

Secondly - don't panic! May 09 is 13 months away. Things may be looking completely different by then!

If you need to move anyway because the house is unsuitable, then start looking to move when your current deal ends in May 09. Even if you make no profit on the house, with a £59K salary, chances are you will be able to get a similar mortgage next year. WORST case scenario, you can rent for a year and save and save and save for a deposit.

I know how hard it is not to worry when things are looking down, but you could spend the next 9 months worrying yourself silly about something you actually have no control over right now - all for nothing! You could be enjoying your kids and life in the meantime.

Could I suggest that if you want some advice on cost cutting and therefore saving a bit more to support your move next year, that you go to the Debt-Free Wannabe Board? If you post a Statement of Affairs (SOA) there - which is a list of ALL your incomings and outgoings - then the fabulous people there will weave their magic and help you identify where you can make savings which will undoubtedly help. It doesn't mean cutting back, necessarily...just some small tips to save you money.

Seriously, mate, I know how hard it is not to worry when you have a family to support. But look at it this way:
* you're debt-free
* you have a great salary
* you have a family you obviously love
* your divorces are behind you
* you have a home

You have little control over the current deal until it ends, so enjoy this year, then in 09 start the thinking over moving. Anything could happen in the world of finance and mortgages by then.

And in the meantime get to the DFW Board who can help you cut back, start saving, and get you in a better position for May 09.

HTH.
KiKi

sarkin

But the guy is not debt free he has 220k of debt and loosing equity. I would be panicking, best you can do is convert to repayment and start paying down the debt

KiKi

Okay, mortgage is a debt, but unless you absolutely have to sell and have negative equity, and need a property of the same or a greater worth then it doesn't have to be a panic situation. OP also states that there probably is enough equity in the property to cushion that at the moment.

I'm not sure that telling the OP to panic is very helpful or constructive advice.

However, I had missed the point that the mortgage was interest only.

I agree that the OP should revert to repayment, but maintain that the availability of mortgages (and getting a new mortgage on the house next year) may well be different in 13 months' time.

Hope you get it sorted, OP - given the IO mortgage, definitely hop to the DFW Board!

KiKi

CLAPTON

far too little information to give any advice

you would be best to go over to the debt free wanabee board and post up full details of your income and spending and debts (and SOA ..read the stickies for first time poster) and see whether they can help you over there.
no one will stand in judgement there.