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Am I going to be up the creek?

(13 Posts)
mumhadenough Thu 16-Oct-08 22:16:24

Short story first. Bought this house last July, valued at £143k, paid £144k, just before everything started to go pear shaped. We carried over our mortgage of £117k from last house, with one year left to run on discount.

We got the chance to build an extension at pretty much cost price, so managed to get an extra 15k on mortgage and a 10k loan in January to pay for extension, new windows, 2 new bathrooms and house valued at £150k when we applied for funds. So now sitting with £132k mortgage and £10k loan. We expected the house to be worth £180k when extended but now only expect £170k. Similar unextended houses in our street are selling for less than we paid, about £140k in immaculate condition (which this wasn't), one with conservatory is selling for £145k. sad.

Due to probs with the council, extension isn't built yet, it starts on wed thank God! BUT my mortgage deal is up and my mortgage jumps £150 a month from this month. I can ride it for a while though.

Spoke to the bank, who offered us a no-tie in period so that we can re-mortgage once the extension is built, i.e. £142k mortgage on house with value of £170k. They wanted us to pay £1500 arrangement fee and our mortgage would still go up £80 per month, not economically sensible I would say, told them to poke it! grin

Soooooooooooooo the house prob won't be finished until about January. We're just outside Glasgow and I don't think our house prices are quite as badly depreciating as much as everyone elses. But I'm really really worried that we're not going to be able to re-mortgage without being shafted! I know interest rates have dropped and they may well drop again which of course will help, but there's certainly been no mention of RBS passing the last cut on to us yet!

I just wondered if anyone has re-mortaged recently and how it was trying to get one. We have an excellent credit rating. The last time I checked I had 995 out of a possible thousand (or something like that!). Will that help or do you think its a case that the banks are keeping all their money to themselves anyway?

I'm getting myself so stressed out about this! sad.

hoarsewhisperer Fri 17-Oct-08 09:24:19

i would scrap the extension, repay the cash and wait - rates will come down again - they have to.

peanutbutterkid Fri 17-Oct-08 09:30:00

I am under the impression that main reason mortgage approvals have been down is because no one has been applying -- not becuase they weren't out there. With the equity you have already, I imagine you could get another mortgage easily, but whether you liked the terms is another matter (need a crystal ball to figure out what typical terms might be in 6-10 months time).

I expect that I also would hold off on extension, tbh.

CHOOGIRL Fri 17-Oct-08 09:34:55

If you are not planning to borrow extra money or move then you do not need to remortgage. You can pay a fee to buy a better rate... or remain on a variable rate and see what happens. Think you have to be realistic though the financial map has changed a lot since you took the mortgage and the days of cheap borrowing are gone - for a while at least.

expatinscotland Fri 17-Oct-08 09:37:01

'I am under the impression that main reason mortgage approvals have been down is because no one has been applying -- not becuase they weren't out there. '

No, it's because the banks aren't lending as freely. Plenty of folks applying and being turned down.

Banks aren't 'keeping all their money to themselves', they don't have it to lend and really never did in teh first place. That's why it's all gone Suzy Wong.

I would not rely on the interest rates declining again because inflation has risen a bit sharply and may well do so again as energy prices continue to rise. It may happen, but it may not, particularly as inflation continues to creep and this is one way the government tries to keep inflation in check.

Prices in and around Glasgow have experienced an 8% drop, although not as much is coming onto the market so there obviously isn't pressure for many to sell, but I'd hold off on the extension and repay the cash and hoarsewhisperer suggests.

mumhadenough Fri 17-Oct-08 14:55:44

Thanks everyone for your input, scrapping the extension isn't an option, the kit is all bought and is sitting between mines and neighbours gardens (its a double extension with us and next door at the same time).

Oh well, I guess I'll just need to sit tight and see what happens!

X

simperingbint Fri 17-Oct-08 14:58:11

i would see an independent financial advisor pronto and get some unbiased mortgage info

littleducks Fri 17-Oct-08 15:01:44

I'd agree with hoarsewhisper, but if thats not an option i suppose there are no choices

Where did you get a number for your credit score from, i have read my credit reports but not seen a number score?

Hope it works out

mumhadenough Fri 17-Oct-08 15:19:50

Thanks, yes I think a visit to a financial advisor may be in order! Hard to find one to trust though I think.

I'm sure the score for the credit report came from Experian online. Did that about a year ago.

noddyholder Fri 17-Oct-08 15:24:12

You do need tosee an advisor because the house will not be worth what you think and so maybe better to scrap extension and stay on the variable rate.If there are houses at 142 that will be the valuation a surveyor will use as a guide.All this doesn't matter too much if you can just ride out teh downturn and it is a home otherwise you are sailing close to negative equity

mumhadenough Fri 17-Oct-08 15:26:52

Was just wondering why you all thought scrapping the extension would help too, did you mean with regards to having lower mortgage payments? Just still seems a good idea to me because we had 17% equity in the house to start with, but at the end we'll have pretty much a brand new larger house with around 15% equity. (hopefully!) But if the equity drops on the finished house, it would have dropped on the unextended house anyway iywkim.

We were prepared to be paying an extra £170 per month for the extended house, as in for the extra funds, but we'd hoped not to get to the stage where we were outwith a mortgage deal and paying a further £150 per month too! sad Which is what has happened really.

I hate hate hate giving banks arrangement fees and especially HLTV fees, I can see the HLTV's are going to end being charged more often now though with house prices dropping!

noddyholder Fri 17-Oct-08 15:37:33

The equity will have dropped on the finished house though.Times have changed I would only extend if you can really afford it and plan to stay there

lljkk Sat 18-Oct-08 15:28:34

22,000+ mortgages a month still being approved (see link).
Weirdly, that's the most recent news report I can find! Plenty about many mortgage approvals being turned down April 2007 (Note, that's early Last Year). I can't find any numbers that compare percentage approvals now compared to say, percentage approvals/rejects 2 years ago.

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