Hello Dear Reader.
After DB spent the day on the phone and researching, we decided against looking for a different mortgage provider and here’s why. We have already spoken to more than five mortgage providers and one independent advisor. We kept being offered interest rates at a fraction of a percent lower (lowest we could get was 4.9) than we’re currently paying. We have no debts and we’ve reduced our mortgage capital by £27K in the last twelve months. We’ve done everything we can to improve our financial standing so we can downsize our lives and it’s the very fact that we’ve done that which has put us in a unattractive position to new lenders.
We’ve had an interest only mortgage for five years and if we had made repayments each month, then we would have paid off £30K of the balance in those five years. By the end of the fixed term of this mortgage, we will have done exactly that. However, we are not attractive customers because the entire amount we have paid off has been wiped off by the down turn in the market and our loan to value status is not great and effectively we have made no difference to the percentage of the house we own.
We have asked all the right questions and know, if we go through an application process and are turned down because we have reduced our salaries (DB’s not by choice he was just one of those public sector workers who had his salary cut by 10%) and don’t have a good loan to value ratio, then we will get a negative score on our credit reference (FICO score).
Just like the players in Deal or No Deal, we have a reasonable deal on the table from our current lenders and it would be sensible to take it. We can move over to a repayment mortgage on a variable rate, no questions asked and we can over pay what ever we like and if and when we have built up better credentials, then we can leave that deal with no financial penalties. We could gamble and end up with the 1p box! There are better mortgage deals out there and I could risk it and might get accepted. I’m going to play safe with my money and know I can afford an interest rate rise as I’m already paying a higher interest rate. Most of us will remember interest rates of 15% and we just got on with paying it!
I will be paying less interest and I will be able to pay off more of the capital. I will continue to do what I always do when faced with difficulties and that’s just hang on and get on with it. I am more determined than ever to reduce the amount I owe and I see a mortgage as a debt no different than car payments. It’s not mine until I’ve paid for it.
Until tomorrow,
Love Froogsxxxxx
Froogs I think you're very wise, our deal expires end of Aug and we have done the same research and discussion and are like you deciding upon remaining with same provider on variable rate enabling us to freely overpay and reduce the capital to a level where we can look at more favourable fixed rate deals,fingers crossed we won't see another Black Wednesday .. Good luck
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We were in a similar position earlier this year, ltv was ok, wages the same but criteria had changed with most providers so the only choice was to stay where we were and pay a bit more, annoying when you have gone out of your way to overpay on the bloomin thing and it makes no difference to them.
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We were in a similar position earlier this year, ltv was ok, wages the same but criteria had changed with most providers so the only choice was to stay where we were and pay a bit more, annoying when you have gone out of your way to overpay on the bloomin thing and it makes no difference to them.
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At least you won't have to pay valuation fees and solicitors fees etc.
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That sounds a wise decision. Good luck with paying off the rest!
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There are times when a mortgage is an asset rather than a liability. Things are not always what they seem in the world of money.
I would be very cautious about changing to a variable rate at this time. What do you think the bank rates are going to do in the next year, two years, five years? Up? Down? Do you think the financial situation in Britain is rock solid or rocky? What effect does the situation in Europe have on your interest rates?
Make a long term plan and set it in concrete. Take out a small insurance policy that you could possibly use to pay off your debt if someone passed away. This is a hidden cost of the lifestyle you are trying to leave behind. The payments for the policy would be a total pain, but look at what happens to families caught up in accidents and illnesses. How would your daughter cope?
Sit tight. Plan. Pay. Plan more. Set it in concrete.
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Hi Louise - good advice indeed. We have life insurance that covers the mortgage - we can't fix a rate as we have been offered crappy rates as we don't meet the criteria and I'm paying 6% at the moment and coping and what ever the bank rate will be will be. No one can get more at the moment, the banks are not lending to most people so I'm lucky to get an offer at all. As for illness, we have free healthcare in the UK and our daughter has a bought and paid for flat, bought by my ex husband for her and she has no mortgage.
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Froogs
Frustrating to stay as you are but wise also.When we bought our share in this property because of or finances Poppa decided find a policy that covers us from the house doing a Dorothy to ants taking up residence. This means that I will if the status quo remains i will be able to keep up the payments. Glad to here your daughter home is all sorted good post
Rachel
Plymouth
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It's all about the overpaying. Whichever mortgage you choose, they are all out to get you in the end, and the only way of fighting back is by overpaying because they don't really like you doing that. Good luck, decisions are good, even when they end up giving satan/santander your money.
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We are with Northern Crock, and to be honest the rate isn't bad. We had no say however when they split the mortgage side of the bank to NR Asset management. Never missed a payment in fact at that point I was overpaying. The minute they did that, I decided enough was enough. I am determined it will go and OH can clear what he owes. 🙂
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Despite not liking Santander (understatement!) I think you are being very logical in your thinking and making sensible decisions. You'll get there!
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