Fixed rate mortgage ending

[Julie]

Help - my fixed rate mortgage with northern rock is ending and best they can offer, means an extra £300 per month. IVA 1st yr review is also due and they won't reduce the payments to accommodate the increase. even though they always knew it was a fixed rate mortgage. Is bankruptcy my only option[:(]

[Welsh Boy]

gr1

I can`t advise on whether bankruptcy is the best route for you, my thoughts were aimed at your present Northern Rock mortgage, if it is currently on a repayment basis would they consider allowing you to pay interest only in the interim period i.e. whilst in your IVA and then convert back to repayment at a later date when it may be more affordable to you.Tony

[Oliver]

Increasing the term or switching part or all of your mortgage to interest only could reduce the payment.

You could also shop around for a better deal with a mortgage broker.

Was your IP aware that the fixed rate was about to expire? What do they suggest you do?

Ultimately as Tony explains if your IVA is no longer affordable or if your creditors are unwilling to reduce payments you will have to think about either selling the house or seeking an alternative debt solution.

[Adam Davies]

Hi
What a ridiculous response from your IP,what company are you with.As they knew of the fixed rate ending why did they not factor something into your IVA ?
Good advice from Tony,look for an interest only switch until your IVA concludes or you have to remortgage in the fourth year
Regards

[Reviva UK]

Hi gr1
Unfortunately I see this sort of issue a lot - quite often with NR.

Scenario

95% mortgage with NR and a 3% redemption penalty - all on a fixed rate "affordable" interest only mortgage.

problem arises when ( as in your case) the end of the fixed rate means a LEAP in payments because you are now on a standard variable rate. Clearly if the mortgage payments go up you have less to pay the IVA so we have a massive problem.

If you are already on a high LTV ( loan to value) mrtgage of 95% you are unlikely to get a remortgage anywhere - I am probably wrong but believe the best deal at present is 90% for people in IVA's ( conditions apply). This would almost certainly be at a higher rate than you have.

Step 1 - speak to one of the recommended mortgage brokers on the site to see what is currently possible.

Step 2 - depending upon what the mortgage broker says you would need advice on how to convince / encourage the IVA company to meet you halfway and get the agreement to work OR need to review an alternative debt solution.

[chris.g]

I would firstly contact NR to see if there are any other mortgage deals they have that you could swap to, that way there shouldn't be a problem with being accepted. Good Luck xx

[MelanieGiles]

And I concur with Andy's points - your IP has to consider the increase in mortgage payments, and should have done this prior to the IVA proposal being finalised. It is not good enough to say that it is not their problem and you need to maintain contributions at the agreed level. Simple mathematics would confirm that this is not possible.

[Helen030166]

I have a similar problem with NR - my fixed rate ends this june and my mortgage will shoot up to £1,200 pm which i cannot simply afford. I am being drafted up with an IVA atm but I dont know whether BR would be a better option as some of our creditors are putting charges on our property so it means we wont get anything if we sold it?
Would we be liable for any negative equity or missed mortgage payments if we went brancupt?

[Andrew Graveson]

Hello,

There would be no specific liability for those debts following BR.

The Northern Rock issue is tricky. It seems that they might not object to their mortgage book shrinking somewhat and seem unlikely to be able to take on new credit-impaired business given their current position.

For this reason it's possible that a transfer to a new NR mortgage product might not be possible. Still worth speaking to them however before considering other options.

A major issue is that N Rock (along with many other lenders) have written many high loan-to-value mortgages and as Reviva UK points out below there are a reduced number of lenders in the IVA mortgage market currently, and loan-to-values are highly unlikely to exceed 85-90%.

For this reason a significant number of people seem likely to be trapped on the Standard Variable Rate with many different lenders. Thought really needs to go into this by both those seeking to enter into IVA's and the IP's that construct them.

With property prices trending downwards this loan-to-value issue is going to affect increasing numbers of people unfortunately.

A good mortgage broker experienced in this type of work will be able to review options and those who regularly post on this site would look into options without any upfront charges.