Hey guys, I’m still confused about how defaults in US subprime mortgage have led to the present world-wide financial downturn?
This is a long one so bare with me!
About 3 years ago now my partner and I bought a flat. We were first time buyers and had no savings but were desperate to get on the property ladder so we decided to get a ‘Together Mortgage’ with Northern Rock. This meant we got a mortgage and an unsecured loan at the same rate of interest so we were able to pay a deposit and also clear some of our credit card debts.
We were happy with the deal at the time and quite confident that house prices would continue to rise (which they did for a while) so that when we came to sell, we would be able to pay off the mortgage and the loan and hopefully have some equity as well.
Unfortunately, my partner had a bit of a problem with personal debt and despite having paid off his credit cards with the unsecured loan when we bought the flat; he continued to use them until he got into a situation where he was struggling to meet the minimum payments each month. As you can imagine this caused a great deal of stress.
We decided the best option was for him to contact a financial management company and enter into a payment plan. It’s not an IVA. They explained that he would not be able to obtain any credit whilst he was in the plan which was fair enough, and they negotiated with his creditors so his interest rates were frozen enabling him to pay back the debts much quicker. He’ll be debt free in 18 months. What they failed to mention to us though, was that this agreement means that he has defaults on his credit file. We didn’t know this until he’s been in the payment plan for over a year.
This was at Christmas when we attempted to get another mortgage. Our fixed rate deal with Northern Rock was coming to an end and they wanted ridiculous amounts of money for us to go onto another fixed rate deal.
However, as we had a 115% mortgage and my partner has a bad credit rating, we tried everything, even putting the mortgage in my name, but we couldn’t get another mortgage.
So we stayed with Northern rock on their variable rate mortgage and although we are paying an extra £150 per month, touch wood, it hasn’t gone up this year.
My question is though, how on earth do we get out of this situation? We are nearly 25 now and I don’t want to be stuck in a one bedroom flat forever. I want us to move forward in our lives but I don’t see how we can with our huge mortgage and my partners bad credit rating?
We know how much we want and know we can afford it, we just want to go over the options and get a good deal, but I don’t know who would have more options, be more honest, etc. We are in the UK.
Any general mortgage/first home buying advice is appreciated.
Yep,we are going to Australia for 6 weeks on 5th July…
I want to buy property but not sure whether now is a good time considering what’s going on overseas. How do you think it will affect property prices in Sydney?
After winning the tax lien auction and paying the promised amount + misc fees, what other financial obligation does property Tax lien investors have during the 1 year redemption period if there is an outstanding mortgage on the property?
We are thinking of cashing in our savings including ISAs to buy a second home, due to the dreadful savings rates. We would use the second home as a holiday home, would not want to rent it out.
Would this be a good financial option, or do you think house prices will continue to fall for the foreseeable future
