Financial/mortgage advice

[shnozz]

I am toying with the idea of selling my house to move back into the city (not that overpriced black snotsville, but back into my local city )

My mortgage is a self cert interest only. Its portable, and early repayment would incur a 4% fee so I'd rather take it with me than pay it off and start afresh. However, the mortgage is only about 75% of the current property value, and as such I got a good rate as the risk to the lender is minimal. However, its likely to be the case I will not need to spend as much on the new place, so will the lender be agreeable to moving the mortgage to a place that has a value approximately the same as the loan amount? I am worried they wont as if the market dips they dont have their cushion to avoid neg equity if they repossess and therefore it represents a risk to them?

Also, since I dont want to incur the fees of paying this mortgage off, it will leave me with around £40k in the bank. I would have rather put it to the mortgage but unless they agree to this without a penalty fee (unlikely?) then I'd like to invest it unti the tie in period with the mortgage ends and then remortgage and put the lump sum off the mortgage at that stage. The remortgage is for 2007 so not a long way away, what would be the best short term investment? (I like the idea of an Audi engine in the Elise, a Noble or a Countach, but me thinks thats not the best of choices )

[ultimasimon]

I have been in the same boat for the last three years, with my loan shark lender keeping the deal tied. In January I will have done the three year minumum tie period and we will be free to tell him to poke it where the sun don't shine

I am also self cert due to the nature of my business. IRC 75% of your property value is the most you can finance on your equity. I have my house valued every year and the last two years I was down about £30k due to non confidence in the housing market.

I would be very wary about remortgaging at the moment, but I am being ripped for 8.8% interest only so I will be changing my provider in January regardless. If you had £40k in hand I would put it back on the mortgage - you can always take it back out later.

[shnozz]

ultimasimon said:

I have been in the same boat for the last three years, with my loan shark lender keeping the deal tied. In January I will have done the three year minumum tie period and we will be free to tell him to poke it where the sun don't shine I am also self cert due to the nature of my business. IRC 75% of your property value is the most you can finance on your equity. I have my house valued every year and the last two years I was down about £30k due to non confidence in the housing market. I would be very wary about remortgaging at the moment, but I am being ripped for 8.8% interest only so I will be changing my provider in January regardless. If you had £40k in hand I would put it back on the mortgage - you can always take it back out later.

cheers simon. My rate on self cert is quite competitive - 4.25%. I assumed that I couldnt put the £40k back into the mortgage without incurring the 4% overall charge as effectively I am changing the contract I have with them by reducing the borrowed amount? I am happy to see out the rest of the tie in period at the new place, but its just the fact that I would rather put the £40k straight off the mortgage when the property is purchased, rather than invest it elsewhere until the end of the tie in period, lump it off the mortgage and then remortgage at a lesser amount.

[minimax]

shnozz said:

I am toying with the idea of selling my house to move back into the city (not that overpriced black snotsville, but back into my local city ) My mortgage is a self cert interest only. Its portable, and early repayment would incur a 4% fee so I'd rather take it with me than pay it off and start afresh. However, the mortgage is only about 75% of the current property value, and as such I got a good rate as the risk to the lender is minimal. However, its likely to be the case I will not need to spend as much on the new place, so will the lender be agreeable to moving the mortgage to a place that has a value approximately the same as the loan amount? I am worried they wont as if the market dips they dont have their cushion to avoid neg equity if they repossess and therefore it represents a risk to them? Also, since I dont want to incur the fees of paying this mortgage off, it will leave me with around £40k in the bank. I would have rather put it to the mortgage but unless they agree to this without a penalty fee (unlikely?) then I'd like to invest it unti the tie in period with the mortgage ends and then remortgage and put the lump sum off the mortgage at that stage. The remortgage is for 2007 so not a long way away, what would be the best short term investment? (I like the idea of an Audi engine in the Elise, a Noble or a Countach, but me thinks thats not the best of choices )

sounds to me that you've got a deal with Abbey, in which case they will require you to borrow a max of 75% of the value of the new property and to reduce the mortgage accordingly, they usually will then charge you the 4% on the amount you pay off in order to achieve this...I say usually because if you yell loud enough you can often get a good will gesture to reduce the ERC - having said that, it'll be clear in your terms that this is the case and so it really would be a case of 'goodwill'

pretty much applies to most lenders except northern rock

[minimax]

ultimasimon said:

I have been in the same boat for the last three years, with my loan shark lender keeping the deal tied. In January I will have done the three year minumum tie period and we will be free to tell him to poke it where the sun don't shine

? I cannot understand this attitude - your lender may well be a loan shark but if you signed the terms and conditions tying yourself into a 3 year deal then what do you expect?

ultimasimon said:

I am also self cert due to the nature of my business. IRC 75% of your property value is the most you can finance on your equity. I have my house valued every year and the last two years I was down about £30k due to non confidence in the housing market.

actually fellow one can get up to 90% loan to value on a self cert deal, and some quite good rates too (5.19% 3 year fix?)

ultimasimon said:

I would be very wary about remortgaging at the moment, but I am being ripped for 8.8% interest only so I will be changing my provider in January regardless. If you had £40k in hand I would put it back on the mortgage - you can always take it back out later.

ok having seen that rate you are with a loan shark, I can only assume your credit rating was...less than perfect when you took that out but these days () even with 5 non settled CCJ's of unlimited amounts and unlimited defaults plus 3 missed mortgage payments in the last 12 I could still source a kensington 90% self cert @ 6.14% 3 year fix

[minimax]

shnozz said:

ultimasimon said: I have been in the same boat for the last three years, with my loan shark lender keeping the deal tied. In January I will have done the three year minumum tie period and we will be free to tell him to poke it where the sun don't shine I am also self cert due to the nature of my business. IRC 75% of your property value is the most you can finance on your equity. I have my house valued every year and the last two years I was down about £30k due to non confidence in the housing market. I would be very wary about remortgaging at the moment, but I am being ripped for 8.8% interest only so I will be changing my provider in January regardless. If you had £40k in hand I would put it back on the mortgage - you can always take it back out later. cheers simon. My rate on self cert is quite competitive - 4.25%. I assumed that I couldnt put the £40k back into the mortgage without incurring the 4% overall charge as effectively I am changing the contract I have with them by reducing the borrowed amount? I am happy to see out the rest of the tie in period at the new place, but its just the fact that I would rather put the £40k straight off the mortgage when the property is purchased, rather than invest it elsewhere until the end of the tie in period, lump it off the mortgage and then remortgage at a lesser amount.

thing is, most lenders view the Early Repayment Charge as a charge incurred when the contract is changed so I should think this move will still incur it

if you want to mail me who your lender is I can check it out with the relevant local business development manager for you

[shnozz]

minimax said:

shnozz said: I am toying with the idea of selling my house to move back into the city (not that overpriced black snotsville, but back into my local city ) My mortgage is a self cert interest only. Its portable, and early repayment would incur a 4% fee so I'd rather take it with me than pay it off and start afresh. However, the mortgage is only about 75% of the current property value, and as such I got a good rate as the risk to the lender is minimal. However, its likely to be the case I will not need to spend as much on the new place, so will the lender be agreeable to moving the mortgage to a place that has a value approximately the same as the loan amount? I am worried they wont as if the market dips they dont have their cushion to avoid neg equity if they repossess and therefore it represents a risk to them? Also, since I dont want to incur the fees of paying this mortgage off, it will leave me with around £40k in the bank. I would have rather put it to the mortgage but unless they agree to this without a penalty fee (unlikely?) then I'd like to invest it unti the tie in period with the mortgage ends and then remortgage and put the lump sum off the mortgage at that stage. The remortgage is for 2007 so not a long way away, what would be the best short term investment? (I like the idea of an Audi engine in the Elise, a Noble or a Countach, but me thinks thats not the best of choices ) sounds to me that you've got a deal with Abbey, in which case they will require you to borrow a max of 75% of the value of the new property and to reduce the mortgage accordingly, they usually will then charge you the 4% on the amount you pay off in order to achieve this...I say usually because if you yell loud enough you can often get a good will gesture to reduce the ERC - having said that, it'll be clear in your terms that this is the case and so it really would be a case of 'goodwill' pretty much applies to most lenders except northern rock

its with the Halifax mate. 4% of the £40k I want ti pay off the mortgage is only a grand, although at 4.25% interest rate I may be better off investing the £40k elsewhere for 2 years at a decent rate and getting a better % as well as avoiding the early redemption fee, albeit only on the £40k. Or do you think they will require me to pay off the £40k so as their liability is reduced in terms of amount borrowed -v- house value?

[rich1231]

I just got a self cert 90% LTV offer through the post today at 4.39 fixed for 2 years.

Ultimasimon, cant you remortgage out of your deal, at 8.8% pa surely even with penalties you would be better off?