Mortgage worry

[abiknox]

Me and my partener purchased our first house in October 2007. We paid �134,000 (127,000 mortgage) on a 2 year fixed rate. My worry is that when we come to remortgage in October this year that the property will now be worth less than the ammount we need to borrow. Will we be given a mortgage for ammount we need?

[bednobs]

you wont necessarily need to remortgage - after an ntroductory rate, the mrtgage usually reverts to the lenders standard variable rate - same mortgage, same house, (look at yur paperwork) no need for you to do anything. If the svr is too expensive for you then you can look around. Depending n your circumstances at the time (including income and house price you may very well not be able to remrtgage but you will still have the original mortgage. I hpe that makes sense

[R1Geezer]

For sure it will be very expensive to move lender with negative equity so you'll probably have to pay the SVR when your discount runs out. prices have falled by 18% so just on paper it's worth 110,000. Usually though when a discount period is close to the end the lender usually offers someithing in it's place, however in these austere times they may well not. In any case I'd say moving lender will be almost impossible and even if you do it will be like getting a 125% mortgage and thus very expensive. If you can't afford to pay the new amount when the discount runs out just pay what you can, do not stop paying and bury head in sand, that's how reposessions happen.

[annie0000]

Bednobs is correct - you took out a mortgage for a full term (probably 25 years) with the first 2 years at a fixed rate. The mortgage will continue at the standard variable rate. With the reduction in interest rates, I can't imagine that you will be paying too much different from what you have been paying. If you can't afford it for whatever reason (bearing in mind, there is a chance that you may even be paying less, it is just that the rate is unpredictable), your best bet is to see what terms are available on your current mortgage i.e. could you extend the term, pay interest only for a while etc.

What you may find, is that by the time interest rates beigin to rise and you need to get another deal, your property may also have risen again and you don't have a problem anymore.

[LCDMAN]

Indeed, it is reported widely that many people are now actually starting to pay less on the new, lower Standard Variable Rates that they revert to once once their "deals" end. The end of a deal does not now automatically mean that your payments will go up - in many cases they are going down, due to the dramatic and unprecedented drop in interest rates.

[abiknox]

Thank you all! I have actually given my mortgage provider a call now and as you stated because of the rate drop our payments in October will be coming down �150!!! Thanks for all the advice!