Mortgage question

mrbios

mrbios

mrbios

Soldato
Joined
7 Jun 2003
Posts
16,186
Location
Gloucestershire
With a baby coming along in 5 months time im trying to cut down the costs of everything and the biggest one obviously is the mortgage....

Currently i have a pretty crap mortgage, which is about 2 and a half years into a 5 year fixed rate, repayment mortgage and the flat the mortgage is on i am renting out (for less than the mortgage, i know not the smartest of moves but i couldn't take living there any longer)

We've tried to come up with a few ideas and i haven't asked the mortgage company yet, but what sort of things can you do with a mortgage whilst in a fixed rate? Could it be possible to switch a repayment mortgage to interest only? or does pretty much everything end up with fees or drastic proportions?!

Thanks for any help!
 
no expert but how about telling them your struggling to repay? Might help you move to a better prioduct - you save oney and the bank keeps getting paid. Pretty sure that mortgage lenders have an obligation to help keep people from having their homes repossesed.

Is selling it out of the question? What's your equity like?
 
Hello Mrbios,

can you give us some more details aout the Early Repayment Charge found in the mortgage key features documents you should have from your lender?

Also if your renting this flat out and do not currently live there, could you not just sell it?


Is there any reason why this would not be possible?

Dan
 
Call me an idiot, but i don't know what equity is, explain it in laymens terms for me :p (is it the amount of the actual mortgage payed off - rather than whats been paid off the interest?)

^ That should pretty much explain how much i know about mortgages etc haha

Selling it would mean being hit with the early repayment charge which about a year and a half ago would have been about £4k or something similar, i assume this goes down with each passing year of the fixed rate?

I was stupid when i rushed into buying my flat really, a case of too much money and over excitement i think
 
Any borrowings you take out will be comprised of two parts:

Equity: the original amount loaned out, less any repayments that have managed to reach it so far.
Interest: self-explanatory.

Repayments will pay off the interest first then equity.

Thats a simple explanation!
 
Ok well having only had the place 2 and a half years i can safely say i haven't paid off any equity yet, unless the deposit counts as equity? in which case that would be £5k
 
bullit in head said:
well that depends what you can sell it for,

equity = what it's worth - money owed....

if it comes out negative you owe if it positive then profit....sorta


bullit
Click to expand...

If i sold it for the same price as i bought it for does that mean i get the deposit back? (without factoring in the early repayment charge anyway)
 
bullit in head said:
well that depends what you can sell it for,

equity = what it's worth - money owed....

if it comes out negative you owe if it positive then profit....sorta


bullit
Click to expand...

this is it for equity. as it's a repayment mortgage you will have paid off a relatively very small amount of the original price so yes you will get some profit, just not much. Your mortgage should have been for value of house - deposit.

So assuming 100k home:

100,000 - 5,000
=95,000 mortgage

less repayments (mostly interest but depends on how long mortgage was for - longer the mortgage the highr the interest portion will be)
= say 93,000 owing now.

so if you sell for original price 100k you'll get the difference back.

hope this makes sense.

craig
 
Last edited:
Cheers, so i guess if i tried to sell it now out of the (for the sake of examples i'll use your figures) £7k the early repayment charge and any selling fees (i don't know what selling fees there are but i assume there are agency fees etc that would need paying?) come out of that £7k to leave me with what at a guess would be about £3-4k

But... if i didn't sell it and wanted to remortgage it to make it cheaper is there a way i can do that, being changing from repayment to interest only or changing the mortgage completely without incurring a load of charges because of being in a fixed rate?
 
Pudney@work said:
Any borrowings you take out will be comprised of two parts:

Equity: the original amount loaned out, less any repayments that have managed to reach it so far.
Interest: self-explanatory.

Repayments will pay off the interest first then equity.

Thats a simple explanation!
Click to expand...
It's also wrong - as explained above, 'equity' is basically the difference between what it's worth and what you owe.

What you've described is the principal/capital.
 
You should be aware that if you're renting the flat out and you got a standard home mortage when you first bought it then you're likely to be violating the terms of the mortage.

Mortages on property to be rented out are typically termed Buy to let mortages.. and will usually be significantly more expensive, with a higher deposit demanded.
 
Fyebot said:
You should be aware that if you're renting the flat out and you got a standard home mortage when you first bought it then you're likely to be violating the terms of the mortage.

Mortages on property to be rented out are typically termed Buy to let mortages.. and will usually be significantly more expensive, with a higher deposit demanded.
Click to expand...

Aye i asked the mortgage company about that, they approved it with my current mortgage
 
csmager said:
It's also wrong - as explained above, 'equity' is basically the difference between what it's worth and what you owe.

What you've described is the principal/capital.
Click to expand...

True, but I assume that step is granted. But then that's due to my familiarity with working with this type of thing more then anything else (I'm an accountant, assets - liabilities = equity no matter what :D )
 
if you can be recommended a reputable one then great. My limited experience has been exceptionally poor. OP i would get some sound professional advice, if your not comfortable with your bank try the citizens advice bureau as i'm sure there will be a free advice service around. My thoughts and indeed actions at the moment is repayment all the way whilst rates are low. There are better deals around if your fixed is dud but rightfully so your lender has an interest.
 
You must log in or register to reply here.
Back
Top Bottom