I am really glad I have already bought my place, and that I have paid off the unsecured loan that I had to take to get a 100% mortgage. I have 1 and a half years to run on a 2 year fixed rate... but on the other hand, I am with Northern Rock, who have just sent me a letter telling me they are rationalising their deals, and I have only a year and a half before I have to move to another deal or stick with the doubtable Standard Variable Rate. The market at the moment suggests whatever lender we are with we are going to be stuck with them and unable to shop around whenever our fixed rates end.
Am I overreacting by watching the Mortgage and property market closely from now and trying to work out if I can make any overpayments to avoid the worry of negative equity / soaring interest rates?
Ary.
-------------------------------------- ***Do not, I repeat Do NOT feed the Trolls! *** *** All Hail the mighty hamsters! ***
OOooooOoo you should have been listening to Radio 2 yesterday, it might even be worth listening to it again from the R2 website. They had a woman on there who’s Northern Rock mortgage was running out and her new variable rate was going to be 9%.
Unless you can get (IE save/repay) 10-20% of the mortgage off, if the mortgage market continues on the same path its taking, you may find you cant remortgage. There arent any 100% mortgages any more. Thus, depending upon your T&Cs you may be stuck with the SVR.
The other problem may occur if the lender doesnt think your home valuation upon application is worth the value of mortgage, in other words the market value of your house falls, you may really struggle to do anything other than accept the SVR. Biggest advice, shop round, you wont be the only one in this situation, martin lewis MSE web forum may be a better place to start, perhaps the Citizen's advice Bureau. Sure they are getting many concerned calls in the same vein at the mo.
BTW what do you mean by
quote:
I have paid off the unsecured loan that I had to take to get a 100% mortgage.
??? Why did you "need" a loan to get a secured loan?
All views above are my own personal opinion and do not in any shape or form construe financial advice.
A 100% Mortgage is actually a 5% Mortgage plus a 5 % unsecured loan, hence my having a loan aswell as the mortgage to pay off, I bust a gut to pay off the 5% loan as I knew that the market was unstable.
I was lucky when my initial 2 year fixed rate deal ran out that I had paid off the unsecured loan part and the market price of my property had increased enough that I was effectively taking out an 85% mortgage.
Looking at the market now, my flat has not decreased in price from what I paid for it, and probably would go for the same price or higher... but this is now, not 18 months time...
My ability to over-pay my mortgage depends on my ability to not get hit with bills such as vet bills for my cat and retaining my job. There is no penalty in my mortgage for making overpayments... just, with the monthly payout already over £700pcm, there isn't a huge amount of leeway to pay much more than that. Still, anything is a start.
Ary
-------------------------------------- ***Do not, I repeat Do NOT feed the Trolls! *** *** All Hail the mighty hamsters! ***
Ary, I'm glad we've already bought too! The 100% mortgages have vanished. We're quite lucky we easily had the 10% deposit and the rest for improvements etc. but my mum has been trying to sort a 100% mortgage with her bank, I should shame them the bank have faffed about putting the wrong "offer" price on her mortgage offer and hey presto, her deal doesn't exist anymore. She's been working long hours this weekend so I don't where she's at with trying to get the deal she was expecting. Nightmare.
Just SOOOO glad I'm not trying to get a 100% mortgage right now. I don't have to worry till 2011 so for us for my mum.
HC, what happens when your fix rate period finishes, or you attempt to remortgage IF prices fall below the level you paid for it? IE your revaluation is less than 100%?
surely you will be stuck until you can stump up the cash to pay the 20% deposit most lenders now require or pay a massively punatitive rate?
We're quite lucky we easily had the 10% deposit and the rest for improvements etc.
don't you fret about me, love! As we stand we have about 30% deposit if need be. I plan on keeping the mortgage amount the same and funding the extra ourselves anyway. Plus I don't work. We manage on one wage and so our income will either jump up in a couple of years or *if all goes to plan*, I'll be in and out of med school, etc. in ten years, struggle for those ten and then wahey, big GP salary! either way, I'll pull through - or sell and rent!
Oh and did I mention that I'm in the middle of penning a bestseller too? I'm very positive about my future, verging on deluded. In my little bubble, I don't see a big house price crash I see a mere dip.
Originally posted by Pflusk: HC, what happens when your fix rate period finishes, or you attempt to remortgage IF prices fall below the level you paid for it? IE your revaluation is less than 100%?
surely you will be stuck until you can stump up the cash to pay the 20% deposit most lenders now require or pay a massively punatitive rate?
What if aliens invade and buy all the spare property at twice market value? Should we be concerned about that too ?
Your first point is crazy given that any dip in house prices won't be anywhere near the constant increase over the past three years. Furthermore, the capital already paid into the mortgage will increase that even further, so she's got no fear of a revaluation being less than where she started from.
Your second point is at best mistaken information, and at worst an outright lie. A quick check will show that all highstreet lenders are offering 90%, with many offering 95% - not the 20% deposit value you've made up.
Secondly, due to decreases in interest rate, the available standard rate won't be significantly different from many peoples fixed rate from 3-5 years ago (a quick search gives me 6.5% at the Natwest for example).
I appreciate you have some bitter experiences, but your horror-mongering on these boards is shameful - particually seeing as it isn't based on anything other than your opinion, and not respresentative of the majority of informed information resources.
You are/will be in a tight spot unless you can act quickly.
Take apart the finances and start investigating the deals now! If you aim to re-mortgage successfully with another bank you will find that they will be actively making it hard for you. They do not want to take your business do to their capital/liquidity position being blown apart by the derivatives crisis a.k.a credit crunch.
Try to pull together a minimum 10% equity otherwise you may fall at the first hurdle of remortgaging. Be prepared for a very high arrangment fee as most people dont realise these are now in the £1,000's at the moment.
Work out how much you can stretch if you have to revert to the APR. It may come to this.
What if aliens invade and buy all the spare property at twice market value? Should we be concerned about that too ?
Your first point is crazy given that any dip in house prices won't be anywhere near the constant increase over the past three years. Furthermore, the capital already paid into the mortgage will increase that even further, so she's got no fear of a revaluation being less than where she started from.
Your second point is at best mistaken information, and at worst an outright lie. A quick check will show that all highstreet lenders are offering 90%, with many offering 95% - not the 20% deposit value you've made up.
Secondly, due to decreases in interest rate, the available standard rate won't be significantly different from many peoples fixed rate from 3-5 years ago (a quick search gives me 6.5% at the Natwest for example).
I appreciate you have some bitter experiences, but your horror-mongering on these boards is shameful - particually seeing as it isn't based on anything other than your opinion, and not respresentative of the majority of informed information resources.
I quite like Pflusk and his doom though! I find his posts interesting. I think he just misinterpreted that I was on 100%. You are quite right though there is plenty of 90% and 95% mortgages - whether they'll give you them is the pickle!
.....indeed HC - and of course remember that most high street banks are offering fee-free mortgage deals too. No arrangement fee or hidden charges. (Although some of the slightly lower interest rates you can get on mortgages with arrangement fees can be a great deal depending on the value of your mortgage)
Way too many people simply flapping around media-hype, and listening to dodgy internet propaganda!
This really gets me going, what is so dooming about house prices being affordable to people? - Average people. An average house for an average family (typically 3.5x Salary)??
We manage on one wage, if we couldn't (we veto "necessities" like holidays ) I'd work too. If we still couldn't, hell, I'd get two jobs. Our mortgage is more than 3.5x - that's the way it is nowadays. And that's on one wage of 25k. It could be a struggle, it could make us go under and cripple but we have our priorities right. The amount of people I hear almost weep that they haven't had a holiday this year. I went down the Thames when I was 5, and abroad for a week when I was 16. I'm still alive.
Mr and Mrs Average need to deal with it. If Mr and Mrs Average want more they can always go work a bit harder, get a better job, get an extra job, spend a bit less, budget a bit better for it, look in a more affordable area, no?
There's always ways and means. Sitting and waiting for it to drop and come to you is always the easiest.
Holy Cheese has her priorities right. There is a certain amount of value to be gained from living in a place of your own. On a different point HC I hope your middle name doesn't begin with a P, as you would then be HPC (lol).
1. fate or destiny, esp. adverse fate; unavoidable ill fortune Pflusk speaks as though this is unavoidable
3. a judgment, decision, or sentence, esp. an unfavorable one: Faced with property market, Pflusk has made his decision. It is some would say an unfavourable one
7. to pronounce judgment against; condemn. Pflusk has made his judgement, and my, how he pronounces it in riveting reading
8. to ordain or fix as a sentence or fate. For those in or trying to get in the property market, Pflusk has an opinion as to their fate and is fixed on it
So, I think doom is a correct term for Pflusk's opinion. I refer to Pflusk's opinion - ie, his doom. I do not refer to the doom of the housing market. Pflusk and his doom. The doom that belongs to Pflusk.
All Hail the mighty hamsters! 
the bank have faffed about putting the wrong "offer" price on her mortgage offer and hey presto, her deal doesn't exist anymore. She's been working long hours this weekend so I don't where she's at with trying to get the deal she was expecting. Nightmare.
for my mum.
sorry mum, fingers crossed and all that promise
