Remortgage advice??

[danroll]

In october 2007 my partner and i took out a 95% mortgage on a house worth 118,500.00 on a 3 year interest only fixed rate @ 6%.

our current deal will run out towards the end of next year and i don't know where i'll stand with getting a re-mortgage?

our home has obviously lost value (nationwide house price calculatior suggests around 20%) and because we're on interest only we haven't repaid any of our loan at all.

Where will i stand in 18 months time (assuming the economy doesn't sort itself out) with a mortgage for 112,500, a house worth �90-95k, and no money set aside to pay back the difference?

I know it's well over 12 months away but i'd appreciate any advice anyone can give.

Thanks
Dan

[bednobs]

you wont have to remortgage - your current lender will move you onto the standard variable rate

[Mully79]

Any advice for Dan or for myself (I'm in a similar situation, my interest-only mortgage fixed rate ends in 12 months, borderline neg equity) would be great.

Can you still be moved onto the mortgage lender's standard variable rate with the interest only option? What happens if the standard variable rate is too high and you want to move to get a more competitive rate with another lender - will the negative equity etc. pose a problem?

[danroll]

The contract we signed stated if we stay on the current mortgage after the 3 years is over our interest rate will jump up to 9.5% (or something similar) which means I'll be paying the best part of �1000 a month to effectively rent my own home... No thanks!

I've been looking round at so far the best deal I've found only lends 80% of the value of my property.

A mortgage advisor could probably find a better deal but I think it's a bit early for that.

[R1Geezer]

I doubt you'll find an lender will ing lend 100% +, your current lender is your only choice.

[Uzoma]

At the time the Standard Variable Rate may have been 9.5% because the Bank of England rate would have been higher. It is worth checking what the SVR is right now. The lender will not revalue your home at that time so it will automatically go on to that rate regardless of the value of your home at that time. If you are still in negative equity at the time your current product finishes, then your best option will not be to remortgage but to stay put. This makes no difference whether you are on an interest only option or not. However, if you can afford to make a difference, start from now to make capital repayments and/or change to the capital and interest method of repayment.

[BenDToy]

Good advice from all posters. It is unlikely that your lender's SVR is more than 6% now, but who knows what it may be at that time. You shouldn't do anything at this stage, and you may well find that you will be better off when it comes to an end. Be careful about changing to make capital repayments though, because when the fixed rate ends, you may be stuck with that payment arrangement at the new rate, whatever that may be. You may not be able to change back to interest only if you need to.
The main thing is don't panic. When the fixed rate ends you will not need to change lenders, and based on current rates your payments should not increase, and may even go down.

[bushbaby_de]

We were in a similar situation (105% mortgage) and were starting to seriously panic about being stuck on the SVR when our fixed deal ended, as they are notoriously high. However we then found out that our mortgage reverts to a tracker at the end of the fixed rate, and that overpayments of up to 100% of the monthly payment are allowed. We feel like its Christmas and we are chucking as much money as possible at the mortgage, in the hope that by the time interest rates go back up we will have enough equity to actually be able to remortgage. So check with your lender what will happen to your mortgage at the end of the fixed term - you may be pleasantly surprised!