This is my current situation:
House purchased in 2006 for £200k
Dream start scheme put in deposit of 25% to be repaid in 10 years or when we sell - whichever comes sooner
Interest only mortgage with Santander with 18 years left to run still stands at 150k and fixed rate of 4.79% ends in April.
We are now able to make some overpayments/change to capital but only on with the right combination of term and rates. Over the last few months we have been in talks with the Halifax about us changing to them as they seem to be the only company we could find who would take us on due to the second charge and the multiples. The idea was to have a 22 year mortgage (due to my husbands age that is the maximum we can have) at 4.09%. The idea was that over the 3 years we have left - although the fixed rate is only for 2 years - before the dream start scheme needs to be paid back, we would have some equity in the house and hopefully we could then raise the additional mortgage needed to buy out the builder in the hope that they will still be willing to offer the 10k discount on buying them out that they are at the moment. Yesterday I got a call from a new mortgage advisor at Halifax due to the one we were dealing with having left saying that he believes our info was put in incorrectly and that they would only be able to offer us the amount we need over 25 years but that they couldn't do this because of my husbands age. He also said the notes that had been put on the system say we are going to pay off the second charge now - which isn't the case - so he isn't sure if that will be a problem too. So all in all we may not have the option to go to another lender. I am going to give Britannia a call today as one last attempt. So I have been thinking about my options while staying with Santander.
Option1. Stay on Santanders SVR and put the house up for sale. This gives us 3 years to sell it before we have to pay the dreamstart scheme back so as long as we can sell it at what we bought it for (which is possibly unlikely at the moment but we could at least try) then it would take the pressure off of trying to sell quickly in 3 years if we can't raise the mortgage required and takes away the worry of what will we do. We could then go into rented but the monthly payments on rented would be around £350 per month more than we pay at the moment on interest only - and I imagine that based on my husbands age then and the length of time it would take us to save a deposit, we may struggle to ever get a mortgage again so maybe that would be a bad idea?
Option 2. Stay with Santander on either their SVR or the 2 year fixed rate they will offer us at 4.69% and make overpayments of £500 per month. Then in 3 years when the dream start issue comes up we hope that someone will be willing to offer us a mortgage large enough to buy them out. I think this would need to be around £175k but obviously the issue here could be what if LTV this is too high or that our incomes don't allow for such a high mortgage? Plus by this point we would only get a 19 year mortgage due to my husbands age so the monthly repayments would be pretty high.
Option 3. Stay with Santander and save £500 per month (we hope that some months we will be able to make it more than this) in the best interest paying account we can find. Then in 3 years when we hope to have £18-£20k saved we offer this to the builder to buy out 15% of the 25% (leaving them still having a 10% second charge in the property) and ask them to defer the other 10%. We then stay with Santander for a few more years on the interest only until we have saved enough to completely buy out the second charge and hopefully pay off some of the £150k and then try to get a repayment mortgage elsewhere.
I know there are a lot of what ifs here but I really feel we at least need to have a plan so we can be working towards us being in the strongest position possible in 3 years (I do appreciate that we will still be in a difficult position then but I would like to aim for the best of those difficult positions).
Which option would you go for? I know which one I am leaning towards but just want to check that I have worked it out correctly as there are so many different things to consider that my head feels like it is going to explode at the moment!
Thanks
Taliwillow
House purchased in 2006 for £200k
Dream start scheme put in deposit of 25% to be repaid in 10 years or when we sell - whichever comes sooner
Interest only mortgage with Santander with 18 years left to run still stands at 150k and fixed rate of 4.79% ends in April.
We are now able to make some overpayments/change to capital but only on with the right combination of term and rates. Over the last few months we have been in talks with the Halifax about us changing to them as they seem to be the only company we could find who would take us on due to the second charge and the multiples. The idea was to have a 22 year mortgage (due to my husbands age that is the maximum we can have) at 4.09%. The idea was that over the 3 years we have left - although the fixed rate is only for 2 years - before the dream start scheme needs to be paid back, we would have some equity in the house and hopefully we could then raise the additional mortgage needed to buy out the builder in the hope that they will still be willing to offer the 10k discount on buying them out that they are at the moment. Yesterday I got a call from a new mortgage advisor at Halifax due to the one we were dealing with having left saying that he believes our info was put in incorrectly and that they would only be able to offer us the amount we need over 25 years but that they couldn't do this because of my husbands age. He also said the notes that had been put on the system say we are going to pay off the second charge now - which isn't the case - so he isn't sure if that will be a problem too. So all in all we may not have the option to go to another lender. I am going to give Britannia a call today as one last attempt. So I have been thinking about my options while staying with Santander.
Option1. Stay on Santanders SVR and put the house up for sale. This gives us 3 years to sell it before we have to pay the dreamstart scheme back so as long as we can sell it at what we bought it for (which is possibly unlikely at the moment but we could at least try) then it would take the pressure off of trying to sell quickly in 3 years if we can't raise the mortgage required and takes away the worry of what will we do. We could then go into rented but the monthly payments on rented would be around £350 per month more than we pay at the moment on interest only - and I imagine that based on my husbands age then and the length of time it would take us to save a deposit, we may struggle to ever get a mortgage again so maybe that would be a bad idea?
Option 2. Stay with Santander on either their SVR or the 2 year fixed rate they will offer us at 4.69% and make overpayments of £500 per month. Then in 3 years when the dream start issue comes up we hope that someone will be willing to offer us a mortgage large enough to buy them out. I think this would need to be around £175k but obviously the issue here could be what if LTV this is too high or that our incomes don't allow for such a high mortgage? Plus by this point we would only get a 19 year mortgage due to my husbands age so the monthly repayments would be pretty high.
Option 3. Stay with Santander and save £500 per month (we hope that some months we will be able to make it more than this) in the best interest paying account we can find. Then in 3 years when we hope to have £18-£20k saved we offer this to the builder to buy out 15% of the 25% (leaving them still having a 10% second charge in the property) and ask them to defer the other 10%. We then stay with Santander for a few more years on the interest only until we have saved enough to completely buy out the second charge and hopefully pay off some of the £150k and then try to get a repayment mortgage elsewhere.
I know there are a lot of what ifs here but I really feel we at least need to have a plan so we can be working towards us being in the strongest position possible in 3 years (I do appreciate that we will still be in a difficult position then but I would like to aim for the best of those difficult positions).
Which option would you go for? I know which one I am leaning towards but just want to check that I have worked it out correctly as there are so many different things to consider that my head feels like it is going to explode at the moment!
Thanks
Taliwillow