Little bit of mortgage advice
- Thread starter Dr House
- Start date
Associate
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- 9 Jul 2011
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If you're in negative equity no one else wants to offer you a new deal!
This is exactly what I have. 'Flexclusive'. Same details as above with unlimited overpayments and switch to any of their fixed deals with no charges or penalties at anytime.
Just noticed the rate seems to have gone up this week from 2.75 to 2.89
My application on the previous rate is still going through the motions, hope they don't cancel it
FYI, barclays are doing 3.59%, 4.1% APR, with a 500 quid setup and min 20% deposit, fixed for 5 years.
Soldato
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- 18 Oct 2002
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- Cheshire
Just noticed the rate seems to have gone up this week from 2.75 to 2.89
My application on the previous rate is still going through the motions, hope they don't cancel it
You'll be granted whatever the rate was when you applied. Unless your offer expires (6 months) in which case you would need to repay the fee and be stuck with the slightly higher rate.
I found them quite good with the text updates to my mobile.
However on the same day my solicitor asked me for proof of buildings insurance (term in the mortgage for release of funds), Nationwide text me saying funds had been released to my solicitor
You'll be granted whatever the rate was when you applied. Unless your offer expires (6 months) in which case you would need to repay the fee and be stuck with the slightly higher rate.
I found them quite good with the text updates to my mobile.
However on the same day my solicitor asked me for proof of buildings insurance (term in the mortgage for release of funds), Nationwide text me saying funds had been released to my solicitor
I'm on about the 3rd week now I think. The property is leasehold though so I think that will complicate things a bit more as they need to obtain authorisation from the freeholder. At least the buildings insurance should be straight forward.
Currently my application is "delayed" because they forgot to send me out the FlexAccount application forms, which is required for the Flexclusive mortgage product.
Soldato
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- 4 Aug 2007
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- Wilds of suffolk
As I said by the time your watch the market approach says "woo look they are rising time to fix" you wont get a decent fix. Its how it works in the market place. Watching other factors gives you a clue but by the time the signs are really there they have already been detected by people who do this constantly.
Really taking the last couple of years as they "new interest rate trend" isnt good, last 10 years here http://www.mortgages.co.uk/interest-rates/interest-rate-history.html
Current economic conditions do indeed lead to a depressed market. I have a personal opinion that the vast majority of people in the UK are very poor financially and that as soon as things pickup old habits will return. They will have paid down lots of debt and will suddenly feel better and able to borrow more, that could easily trigger some unexpected inflation and that will almost definately be attempted to be controlled with interest rates.
Our current "high" inflation compared to low interest rates cannot continue long term.
If you want to see how dramatic interest rates need to rise just look at China or India, both trying to supress inflation with interest rates
http://www.bbc.co.uk/news/business-15441522
Soldato
- Joined
- 4 Aug 2007
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- 22,438
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- Wilds of suffolk
Found a longer term base rate listing.
I remember the 90s, didnt stop people voting then I dont see the government accepting inflation and not raising base rate now to mid/high single figures to control inflation when required at the ris of alienating some mortgage holders.
The difference is that a lot of the current inflation is not going to be affected by interest rates as its purely imported and consumer spending is already dampened. When that changes you will see interest rate rises, its not if, but when.
I remember the 90s, didnt stop people voting then I dont see the government accepting inflation and not raising base rate now to mid/high single figures to control inflation when required at the ris of alienating some mortgage holders.
The difference is that a lot of the current inflation is not going to be affected by interest rates as its purely imported and consumer spending is already dampened. When that changes you will see interest rate rises, its not if, but when.
So much fail in one post.
I didn't say that was my approach though? Of course reacting when the rates are already rising it is going to be too late. I said, keep an eye on the market and key economy indicators (like inflation, especially salary inflation and a large reduction in cost-push inflation) and make a decision 6 months before the rates start rising for real. Yes the banks do this too but the fixed mortgage products only start being more "seriously" affected as the certainty of a rate rise grows, which could be 3 months after the first indications.
It is the *type* of inflation that we have right now that matters. Which is cost-push inflation. This type of inflation isn't controllable through interest rates. Interest rates are designed to control growth and demand. Since we have neither right now, whacking interest rates up to 5% is going to do bugger all except make the economy even worse. As it increases the cost of lending, which isn't something we need at all. We WANT banks to be lending to small businesses and first-time home buyers. 5% right now would ensure hundreds of thousands of people default on their mortgages, repossessions would rocket and social housing demand would rocket. It would make the government burden of welfare even greater.
My comparison to Japan was relevant and slightly valid, because the context of the situation was very similar. But a comparison to India and China is ludicrous. Those economies are booming right now. All their inflation is from demand-pull. This is where consumers just can't get enough of spending their hard earned on crap. Possibly a lot of it is driven through easy credit as well.
The rates absolutely do not and must not be raised to those levels, any time soon.
Comparisons to western economies are valid. Look at the USA and rest of Europe.
I didn't say that was my approach though? Of course reacting when the rates are already rising it is going to be too late. I said, keep an eye on the market and key economy indicators (like inflation, especially salary inflation and a large reduction in cost-push inflation) and make a decision 6 months before the rates start rising for real. Yes the banks do this too but the fixed mortgage products only start being more "seriously" affected as the certainty of a rate rise grows, which could be 3 months after the first indications.
The rates have been historically quite high to control GDP growth and demand-pull inflation. Overlay that chart with one for GDP growth and you will see. GDP growth and demand-pull inflation are long gone from this country and won't be returning any time soon.
That assumes that banks will be willing to lend people with bags of credit again. I doubt that they will. It will take a couple generations for that to happen again, for this depression and its lessons to have been forgotten. Also let's not forget the huge squeeze on disposable income at the moment. Many people simply don't have the spare cash to be overpaying on their debts.
Sure it can. 5% is nothing in the grand scheme of things. The BoE are deliberately stimulating the inflation through QE and low interest rates. It is evaporating away our debts. What actually keeps Mervyn King awake at night is the prospect of *deflation*. If it wasn't for the BoE's current measures we would almost certainly be in a state of deflation. That's what they are afraid of. They don't want that to happen and are doing everything possible to ensure we stay very firmly in the realm of inflation. Inflation is expected to fall rapidly in early 2012. It could get so low that the BoE sees fit to perform more QE just to keep inflation in the positive figures.
It is the *type* of inflation that we have right now that matters. Which is cost-push inflation. This type of inflation isn't controllable through interest rates. Interest rates are designed to control growth and demand. Since we have neither right now, whacking interest rates up to 5% is going to do bugger all except make the economy even worse. As it increases the cost of lending, which isn't something we need at all. We WANT banks to be lending to small businesses and first-time home buyers. 5% right now would ensure hundreds of thousands of people default on their mortgages, repossessions would rocket and social housing demand would rocket. It would make the government burden of welfare even greater.
My comparison to Japan was relevant and slightly valid, because the context of the situation was very similar. But a comparison to India and China is ludicrous. Those economies are booming right now. All their inflation is from demand-pull. This is where consumers just can't get enough of spending their hard earned on crap. Possibly a lot of it is driven through easy credit as well.
The rates absolutely do not and must not be raised to those levels, any time soon.
Comparisons to western economies are valid. Look at the USA and rest of Europe.
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You should be fine, as it's an existing build your exchange and completion date will be well within 6 months. Having said that you have 6 months from the offer I believe rather than the application (we delayed my application so that my completion date would fall within 6 months of the offer).
As you have paid a fee for a particular product, which has now changed, I would expect and think that you will be given the product you have paid the fee for, irrespective if the fees are the same. If you application was denied you would have to reapply which would be at the slightly higher rate.
Nationwide are quite good and my mortgage advisor was brilliant. I went to them direct after having had a good hunt around. In my experience they are quite reasonable and everything should go through quite smoothly. I would search for your life insurance elsewhere as I got mine £5 cheaper per month for exactly the same package, I just went direct to L&G. As for buildings & contents it's probably in your best interest to go via Nationwide as they have a vested interest in the property.
I would go for the tracker at the moment. Base rates are going nowhere in the next 2 years minimum in my opinion. There is nothing out there to suggest BoE will raise them anytime soon.
I've just taken on my second tracker mortgage - a 2 year tracker at 2.65% and will re-evaluate in 2 years time. My other tracker is a lifetime 0.99% above base (1.49% at the moment). The first one has saved me a great deal of cash over the last 4-5 years and hopefully will continue to do so until I deem it necessary to fix.
I have a Bristol solicitor working on my London property purchase. Seems perfectly fine at the moment but I havent exchanged yet.
I've just taken on my second tracker mortgage - a 2 year tracker at 2.65% and will re-evaluate in 2 years time. My other tracker is a lifetime 0.99% above base (1.49% at the moment). The first one has saved me a great deal of cash over the last 4-5 years and hopefully will continue to do so until I deem it necessary to fix.
I have a Bristol solicitor working on my London property purchase. Seems perfectly fine at the moment but I havent exchanged yet.
@BennyC
I hope my completion is November or December at the latest TBH6 months is
!
Is life insurance compulsory or just strongly advised? I don't really see the point as it is just me that will be living there?
As mine was a new build I reserved in February I had to wait until within 6 months of the estimated completion date before applying & exchanging.
It depends on your situation and finances. The idea being that if for any reason you should die suddenly your family or dependants have a lump sum given to them to allow them to pay off the mortgage early and any charges, to save them loosing their home after you have died.
So I'm insured for the remained of my mortgage which is very small sub £50k due to inheritance from my fathers death 2 years ago. It costs me £11 a month though I'm 22, fit and healthy. The older and more complicated your medical history the more it will be and you may not be covered for certain things. You can also get accident & sickness cover should you be unable to work.
I would probably get something, if you can afford it as should you die you don't leave the pressure on your family to sell your home before they default on the mortgage. Further more if you are in negative equity and they have no savings to clear the difference of what is still remaining on the mortgage after the sale of you house it would not be a good situation to be in (Probably written off as a loss).
It would also mean on your death somebody could inherit your property whether that be any children maybe a new girlfriend or partner or even your parents.
This is my understanding of it, it might not be quite right but most of it is there.