Remortgaging question

[nomoreheels]

Hi all, I'm going to approach a FSA too but just thought I'd see if I can get any input here too.

We currently hold a mortgage with Bradford & Bingley, who as most will have heard, went belly up a while back. Existing mortgages are being honoured but they aren't offering any new products.

We took out a 107% mortgage (I know, we were desperate and I regret it now) at 6.3%, 10 year fixed rate with option to get out at 5 years. The problem was that our vendor wanted a certain price (£145k) and the valuation came 15k under. We argued it was a low valuation but they wouldn't budge. We talked the vendor down by £6k, meaning we borrowed 107% for £139k.

We've paid off 3 yrs 4 months on a repayment mortgage, so the capital has gone down to around £130k. Bradford and Bingley are keen to shift everyone out of their mortgages so they have permanently waived any early redemption charges.

Unfortunately due to the market slump, when we last had the house valued a year ago, the EA reckoned we would get around £125k for it. We gave up trying to sell as it wouldn't be worth our while.

I'm now P and also on sick leave, so looking at ways to reduce our outgoings, especially once I am on maternity leave from March. I would dearly love to get that 6.3% down a bit as it would make a real difference!

In the current climate, would anyone have us for a remortgage? If our mortgage is at around £130k and the valuation is still the same, I'm doubtful anyone would take us as that would technically be a 100% mortgage. Or would it be different because we already own the property? Would they have to accept the valuation (which I have a copy of from the time we purchased) or would they do a new valuation?

Any thoughts gratefully welcomed.

I think you're going to struggle to remortgage if the valuation is less than the amount you want to borrow. Most companies are looking for at least a 10% deposit before they offer you anything at all and 20% if you want a reasonable interest rate. There's no harm in getting an independent mortgage advisor to do the legwork and find out properly but I wouldn't be all that optimistic if I were you. You may find 6.3% is the best offer in town at the moment.

Speak to a local estate agent to get an idea of the value of your property. You will need at least 10% equity to remortgage. If you are really struggling see if you can go onto an Interest only mortgage for a while.

Thank you both. Prices may have improved in the year so I'll look into that & see if it looks hopeful. I'm doubtful that we have 10% equity yet (although we would just about if its current value is what we paid) but you never know.

I'd rather stay on repayment (hate the idea of not reducing capital) so will just try to tighten up in other areas if it's no go. My DP has a good job & freelance work on top so we'll manage, just scary how much life's standard outgoings are before you do anything else!