Remortgaging - any thoughts?

[skint]

Following on from the money saving thread, I have been taking a long hard look at our finances, and have decided that one way for us to go would be to remortgage. We have various debts (car loan, credit cards, secured loan) of about £38,000. This means that although we are both on good wages, we seem to have no money left after paying off these bills, as well as all the other. I have been taking tips from the other thread (been using only one washing powder tablet - no difference at all! ), but think we need something a bit more drastic.

Our mortgage is £70,000, the house is worth (approx) £120,000, so we have quite a bit of equity there, and it seems logical to put all the debts together, cut up the credit cards, make a strict budget and start again.
Also, our current mortgage is an endowment mortgage (only had it for 4 years), and I really like the idea of a repayment one. Looking on the "Money Supermarket" website, I've found a number of mortgages, which would leave us from £400 - £550 better off each month. Our mortgage would still only be about 90% of the value of the house, and it would be well within the maximum that banks are usually prepared to lend.

However, there must be some drawbacks - I realise that we wouldn't get anything back from the endowment, but am happy to keep it on as a (admittedly fairly poor) investment. We would obviously need to up our life / sickness / unemployment insurance, but I;m sure that wouldn't take up the £400 we would have "spare".

Another question I have is how can we get our house valued before actually applying for the mortgage? Where we live there are so many different types of houses - some are commercial (B&B), some are doctors / dentists etc, so I can't go the "compare to another similar property nearby" route. I really don't like the idea of getting an estate agent round under false pretenses, I hate lying (the embarassment of being found out), and I couldn't be bothered with the hassle of them phoning up "have you decided" etc.

So, has anyone else gone this route, are there any holes in my plan, any other helpful hints?

PS Changed my name for this one - bit embarrassed about the mess we've got ourselves in.

Having your house valued is only a matter of phoning up some estate agents and asking them to come round and value the house - easy!
We re-mortgage at the drop of a hat - it's very easy. We're now paying less than we were when we bought this house 5 years ago, even though we've borrowed more money! Go and see an independent financial advisor who should be able to get you a good deal - there's more people out there then the usual banks and building societies.

We've got an endowment mortgage, but I always understood that backing out of them early was a really bad idea, as they only gain any value in the last year or so. Would you carry on paying into this, and take on the repayment mortgage as well? In which case, where would the extra 400 pounds come from?

Sorry if I'm being thick - I've been looking at our mortgage as well, and don't really understand it, so it would be useful if you could shed some light!

The £400 would come from the fact that we wouldn't have the loans/credit cards to pay any more - so the mortgage payment would go up, but by a lot less than the total of the loan/credit card payments. Of course, this is mainly because we are paying them off over a longer time, but also they would be at the mortgage interest rate (5 - 6 %) rather than the rates they are at now (from 8 - 15 %).
The endowment would be worth nothing if we got rid of it now, but we could keep it running alongside the new mortgage - the difference would be that when it matures, we would not have to use the lump sum to pay off the mortgage (which it probably would not be enough to do anyway)- the payments on the new repayment mortgage would have been doing that.

Ah I understand! Sounds a good plan!

Yes, but is it too good to be true? I'm supposed to know about these things, as I work in financial services, but another area is my speciality. I think we'll call our IFA for more advice, but still keen to hear of anyone's experiences.

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Best to consult your IFA but yes it looks like a good idea.

Try not to sell your endowment if you can possibly afford it (as that would be a waste) - could you afford to keep paying into it as a separate savings plan (i.e. not use it to put towards the house) while getting a completely repayment mortgage.

Even stopping putting money in or reduced payments in but keeping it going to term is a better option than cashing it in now. This is what we're hoping to do (freeze the endowment but keep it, and switch to repayment mortgage). Certainly something to hash out with the IFA anyway.

We remortgaged too, and it was straightforward. The lender sent round a surveyor to value the house, but the survey fee was refunded by the lender (Alliance & Leicester's Feesaver mortgage). It does cut monthly repayments to add expensive credit card debts to a mortgage, but a word of warning - don't forget that, overall, you will be paying more interest, not less, because you will be paying the debt back over a much longer period. For a large debt, that might be the best option. You might also consider taking out a personal loan at a good interest rate - I have a cahoot loan (www.cahoot.co.uk) at 7% interest. Its flexible, so you decide how much to pay back each month (there is a minimum payment, but in good months you can pay more).

Remorgaging is a good idea - we have done that with the endowment still running and a new endowment for the top-up amount. The most important thing is CUT UP THE CREDIT CARDS - we didn't.................

If you are remortgaging with another company-chc the costs up front. We wanted to swop to Virgin one account- filled out mountains of forms, rushed to get year end accounts done for business, then they said- great well valuation fee will be £850 ! I think not!! couldnt bear to pay someone that for wandering round my house for a couple of hours. So we said no thank you and they are still pestering us.

I've remortgaged a few times - it's dead easy and well worthwhile. They will come round to value the property so you don't have to worry about that bit. I am in a similar situation to you and am thinking of remortgaging again. Yes, I know you do pay more but since it's over a long time a) you won't feel it and b) if you were really good, you could pay more off each month than the minimum required.

Meant to add, egg charge nothing to switch and are pretty competitive.

But Tinker, my problem is that I don't know if we can borrow as much as we need, as I have no real idea how much the house is worth (I know this sounds stupid, but as I said, there's really not much to make a real comparison with). So I don't want to get to the stage of the valuation only to find that we can't carry on. I suppose we'll have to go the estate agent route.

But, skint, if you remortgage with someone who doesn't charge anyway, then the worst that can happen is that they turn you down. How long have you had your house?

It's the rejection I can't face I know what I'm like, once I get an idea, I want it to happen NOW - can't face going through a whole process of forms, questions, etc, only to be told "no". I also find it quite embarrassing "admitting" to these "grown ups" that we're not great at handling our finances.
We've been here almost 4 years, done a few (minor) improvements, and with the rise in the market, I'm sure the house has gone up substantially, but just can't gauge by how much....

skint - you've probably already tried this but have you had a look at www.rightmove.co.uk to see what similar properties in the vague vicinity are priced at? I know you said that similar properties weren't near by but I wondered if you'd just been looking in the local estate agencies windows for that.

Won't be anywhere near as accurate as getting a proper valuation but might give you an indication if it's worth proceeding with all the paperwork

Funnily enough, I've just been looking at local properties on the internet, and I just can't decide...a 3 reception, 4 bedroom house goes from £85,000 to £250,000 depending on what area you're looking at. I guess that that gives away the fact that we're not in (or anywhere near) London....

LOL... yes, it's hard to work out isn't it - we're looking to move and what we can get for our money widly differs from area to area - trying to work out which are the "nice" areas and which are simply just overpriced is really hard work when you don't know that part of the country well!

Mind you, even estate agent valuations we've had on our current property have had quite a large variation so it might be worth just going straight to the mortgage company and be done with it... a pain though it is

Is it a good thing or a bad thing that many major decisions in my life are run past the mumsnet panel before I go ahead?.....
One thing I do know - it's certainly a great reassurance that we're not the only ones to get ourselves into this situation. Have to be strong and KEEP OURSELVES OUT from now on.
By the way, has anyone used the Egg mortgage supermarket? It's really good, gives you loads of ways to compare / sort the mortgages it comes up with. So now we have to choose....

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Just a thought with you only having had your mortgage for 4 years but remember to check whether there is a redemption penalty and how much it is. We looked at remortgaging recently but found that our redemption penalty still ran for another 2 years and it was about £1500 which in my eyes was far too much money to be paying to a bank. It by far outweighed any advantages of remortgaging.

Skint - surely looking at your finances and consolidating your debts into your mortgage shows you are proactive with your finances so nothing to be embarassed about.

Megg has a good point about the penalties. We had a five-year tie-in but wanted to move after three. We got round the redemption penalties by keeping the existing part of the mortgage as was and then taking out the rest on a different product (two year fixed) with the same BS. Possibly you could do this. This meant that the five year and two year (3 + 2 IYSWIM) bits finished roughly at the same time. We then saw our IFA again and transferred the lot to a different lender.

Also a good idea to get a flexible mortgage where you can overpay if you can afford it. Then you don't necessarily have to be paying that credit card off over 20 years. Half of our mortgage is endowment set to come in at £6K below required amount so we are going to increase our repayment by £20 a month which should be enough to offset the deficit.

megg, we do have redemption penalties, but it is only 1 or 2 months payments by now (£300 - £600), which is still worth it, I think, for the mess it would get us out of.
Robinw, you're right about having a rethink. I don't think we live an extravagant lifestyle - an expensive holiday to me is £500 for a week for the 4 of us, and we don't smoke, but we do have a cleaner (a real life line that I'm reluctantly coming round to the idea of losing), and I have in the past been sucked into the "I want that and I want it NOW" way of thinking. But we're really determined this time to try and be a bit more realistic / patient, and wait for things if we really need them. I've been following the money saving thread with interest, and am already putting into action some of the advice.
Thanks everyone so far for your advice - keep it coming!