Is it worth buying the BI in BR?

[BrassicLintus]

Hi quick question for the mortgage experts on here. To summarise I have an £81K interest only mortgage that I'm currently paying £607 per month for (it started off 2 years ago at £350!), I also have a secured loan for £25K, making a total of £106K (but I'm tied into my mortgage till Jan 08 - early redemption penalty is £6K), so total amount owing at the moment is £112K. My house is worth somewhere around £110K. I went BR in August so no chance of remortgaging as yet, but my question is once I'm discharged next year (long time yet I know but just looking at options) what kind of rate could I expect to get - how likely would it be that I could reduce my monthly mortgage/loan repayments? Is it really worth me trying to hang onto my house seeing as i'm paying over half my monthly wages just to provide a roof over my head (heaven knows come January what rate I'll be on?! Would I be better just cutting my losses and just letting the OR dispose of my house? I know a lot can happen in a year but any advice would be much appreciated. Thanks in advance.

[MelanieGiles]

Hi Brassic

I won't deal with the mortgage issue - as there are other more qualified experts on the forum to assist with that - but just on the point of selling the property, the OR will not deal with this as you are in negative equity. Best thing to do is find a friend who will buy out the equity for a nominal £1, and then this removes it from the bankruptcy. If you can no longer afford to pay the repayments, handing the keys back to the first mortgage company and going into a cheaper private rental might be an option. You might even be able to find someone who will buy your property and allow you to remain in situ as a tenant.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

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[mikebdomain]

Hi BrassicLintus

I would not like to quote any possible rates with the volatility in the current market place and not knowing where we will be when you come to remortgage. But, after Jan you are 6k better off, (because of the ERC finishing). Therefore the position at that point would be 106k owed on a 110k it would all depend on your risk feeling on the market place

If your property rose 9.4% over the next twelve months, as it did in the last twelve months (land registry house price index report for England) that would mean in twelve months time you would owe 106k on property worth 120k. Which would mean an LTV of 88% and would mean a built up equity 16k for the sake of 8 - 12 months.

In the current market you probably still won’t be able to remortgage, (max approx 85% ex bankrupt less than 12 months) but who knows what will be available when you come to look into your position…

It’s all to do with your risk appetite and affordability.


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[BrassicLintus]

Many thanks Melanie and Mike. I understand your reluctance to quote rates Mike - my mortgage has risen 5 times this year already! Heaven knows what rate I'll be on in January as I think I'm on one of their "special rates"!!! I think I'll hang on, buy the BI and play the waiting game until January.

[mikebdomain]

I expect you are on their standard variable rate which rises in line with the BOE and LIBOR rates

FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf