Hi, myself and the girlfriend bought a house in November 2007. We were advised to go with a 100% interest only mortgage for the first term, then change to a repatyment martgage in November of this year. With everything that's happened since then, falling house prices and everything else, what is likely to happen? I have to admit it, I haven't got a clue! Thanks

Hi Mark,

To be honest you don't really have that many options.

You won't be able to move the mortgage to another lender as you will either be in negative equity (if the value of your house has fallen) or alternatively at 100% loan to value (if it hasn't fallen).

In either case, no other lenders will accept you for a new mortgage.

So what you are left with is staying with your existing lender. Contact then and ask them what new deals they are willing to offer you about 2 months before your current deal expires. Hopefully they will offer you a new fixed deal (or something) which you can change to when your current deal runs out. The alternative is to just slip onto their standard variable rate, which is what will happen if you don't do anything.

This may not be a bad thing, as currently, standard variable rates are reasonably low. You may even find that your monthly payments reduce.

What I would suggest is paying off as much of the mortgage as you can whenever you have spare cash, most lenders will allow you to overpay by a certain amount without any penalty.

In the long run, perhaps 3 years or so, you will find your property has increased in value again and you will be able to either sell it without making a loss or remortgage to another lender for a new deal. But at the moment, your current lender is your only option.

If you need further advice, either reply on here or contact a mortgage broker, such as myslef, who will be able to go through things with you in more detail.

Hope that helps.