Advice re Mortgage

[Duffers Mum]

As some of you will know I have been making token paymens on my credit cards since last year with the hope I can make F&F offers this year.

 

With DH's inheritence coming through shortly, we will be able to clear all our debts and most of our mortgage, we took out a 3 year fixed deal last year.

 

I am wondering if when we go to see the bank and advise we want to pay a lump sum off our mortgage and leave approx £20K outstanding whether my current credit problems will give us a refusal. We will have over £100K equity in the property so am hoping it won't be too much trouble, however in these days of companies tightening lending criteria I'm just a little bit unsure.

 

Any advice?

[WendyB]

I can't see that it would be a problem. Its not like you're asking for more money, is it? My thinking is you've already got the mortgage for xxx amount, you will be reducing that amount, so why would there be a problem? You will be reducing your debt to the morgage, in this instance I woulldn't have thought any credit checks would be necessary. Usually when a fixed rate ends it would just revert to standard variable rate, you don't have to apply again.

 

As an afterthought, have you got charges on the credit cards that you could claim back. might reduce your debt to them if there are.

[mrmarmite]

if in fixed mortgage check out the cost of getting out 1st it usually a percentage so u need to weigh up is it worth coughing 5k to clear or waiting 2 years (leaving cash in a bank account gathering interest and a bit of dust)

[Duffers Mum]

I think we'll have to pay probably £2K for a redemption fee, what we want to do is reduce the amount outstanding on the mortgage and then obviously lower the monthly repayments accordingly, we don't want to have to reduce the amount outstanding and still pay the £850 per month we are currently paying, hope that makes sense. I'm pretty sure if the Halifax (who we are currently with) won't help, there will be somebody else who will.

 

Regarding charges, 3 out of the 5 CC companies stopped interest and charges immediately, its only Barclaycard & Sainsburys who are continuing to add interest and charges, B/C are currently being investigated on my behalf by TS and they've gone very quiet, although continue to add interest etc every month. When I offer F&F it will be on the original amount outstanding and Sainsburys and B/C are bottom of the list!

[volvodriver]

You need to do some maths on the redemption, on my fixed rate I can overpay a certain amount each year penalty free.

 

You need to look carefully and see what terms you have and the best option of repaying a lump sum, or repaying what you are allowed penalty free and funding the monthly payment from over and above what you want to reduce it to from capital.

 

20 minutes with a spreadsheet should sort it out for you.

 

Tony

[tomterm8]

Hm...

 

What interest rate is your mortgage? If it is a fixed rate deal, and you can get a savings account with higher interest rate or the same interest rate, then you should wait a little while till the redemption period ends.

 

I agree with checking out if you can reclaim charges;)

 

 

in this scenario, it is well worth getting an independant financial advisor, and having a chat.

[WendyB]

Even though they've stopped charging now, you should be able to reclaim any charges that were already on there. This would reduce your balances due to them. Why pay F&F on the full amount including charges when you may be able to get the charges taken off the balance? If you have statements, then work out the charges and send Prelim. If not, send SAR to get info. The OFT case does not cover Credit Cards. You'll probably find it pretty straightforward to get the charges back, you'll have to go the N1 route but don't worry about that, plenty of people on here to advise:)

[WendyB]

To reduce your monthly mortgage payments in the meantime, you could go onto interest only for a while. Only to be considered on a short term basis, but worth considering in the short term. Have done that myself for a bit of breathing space, thn changed back to redemption when money not so tight.

[Duffers Mum]

Wendy - My CC accounts were all up to date payment wise until I asked for reduced payment terms so there are no charges to reclaim unfortunately.

 

Regarding the mortgage, DH is having to take compulsory early retirement and so we would not be able to place inheritence in a savings account as just my salary would not be enough to see us through (if that makes sense!), we need to free up as much as we can as he may not be able to find another job.