Mortgage Rate Rises

[Haggisman]

When I had my remortgage I was going to wait until right close to the expiry to action it. As we were on a better (slightly) rate with current. Erc was unavoidable.

Well, I got too twitchy. I read clauses in it saying about if house is valued too low at time of actioning it etc. I also wondered if a last minute credit check or something would scupper it.

Obviously as time went on rates were going up. So If it did fall through I'd never get that rate again.

In end I got it Done a month early. Wasn't worth the stress waiting.

Yeah, the house price dropping is the main thing - I realise any crash is unlikely to manifest until some point next year at the earliest (as more and more people come to the end of fixes), but like you say, getting twitchy! If it was just a case of a couple of months at a higher rate we'd be going for it straight away, but we would have a couple of £k in ERC to repay as well, which makes the decision a bit more difficult

 

[413x]

Yeah, the house price dropping is the main thing - I realise any crash is unlikely to manifest until some point next year at the earliest (as more and more people come to the end of fixes), but like you say, getting twitchy! If it was just a case of a couple of months at a higher rate we'd be going for it straight away, but we would have a couple of £k in ERC to repay as well, which makes the decision a bit more difficult

Definitely.

If you're waiting for an ERC to expire its more of a good reason to wait.

But when you hear mortgage offers being pulled. Can't help but increase anxiety

Cost of getting this stuff wrong is high

 

[Zefan]

Cost of getting this stuff wrong is high

Yes, the uncertainty/stakes are insanely high, even fixing now for "certainty" is locking in 5 figures of higher payments for most. I don't think anyone will really be OK looking back knowing they've paid £10k for certainty alone.

 

[413x]

Yes, the uncertainty/stakes are insanely high, even fixing now for "certainty" is locking in 5 figures of higher payments for most. I don't think anyone will really be OK looking back knowing they've paid £10k for certainty alone.

I found it hard 6 months ago.
Its even higher now.

Locking in 10 years at 4pc now when rates could be 2pc in a couple of years.

But no reason to think 4pc is a great offer and rates sit at 6pc for years.

 

[Zatoichi.uK]

Just been checking with Natwest on overpayments and had the response below. I thought either the monthly payments get reduced or the overall term gets reduced?

I must make you aware that your overpayment will reduce the balance of your mortgage and you will therefore pay less interest over the period of your mortgage. However, the term of your mortgage will not reduce, and your contractual monthly mortgage payment will be recalculated following any overpayment over £1000.

Is it even worth it if the term stays the same? Surely it only benefits me when I come to remortage?

 

[ChrisD.]

Just been checking with Natwest on overpayments and had the response below. I thought either the monthly payments get reduced or the overall term gets reduced?

I must make you aware that your overpayment will reduce the balance of your mortgage and you will therefore pay less interest over the period of your mortgage. However, the term of your mortgage will not reduce, and your contractual monthly mortgage payment will be recalculated following any overpayment over £1000.

Is it even worth it if the term stays the same? Surely it only benefits me when I come to remortage?

It benefits you because of the amount you save in the long run as interest is calculated in the whole amount.

 

[OldKitMan]

Just been checking with Natwest on overpayments and had the response below. I thought either the monthly payments get reduced or the overall term gets reduced?

I must make you aware that your overpayment will reduce the balance of your mortgage and you will therefore pay less interest over the period of your mortgage. However, the term of your mortgage will not reduce, and your contractual monthly mortgage payment will be recalculated following any overpayment over £1000.

Is it even worth it if the term stays the same? Surely it only benefits me when I come to remortage?

Can you make smaller repayments more frequently to have the desired effect?

 

[BUDFORCE]

Do you have any source for this? I have a client due to exchange imminently with a Together mortgage offer

Ring them and ask them.

I was given the information from someone (I work in the Industry) it's usually spot on.

I also knew all the staff at another lender Bluestone were all going, about a week before they did.

 

[Raymond Lin]

Just been checking with Natwest on overpayments and had the response below. I thought either the monthly payments get reduced or the overall term gets reduced?

I must make you aware that your overpayment will reduce the balance of your mortgage and you will therefore pay less interest over the period of your mortgage. However, the term of your mortgage will not reduce, and your contractual monthly mortgage payment will be recalculated following any overpayment over £1000.

Is it even worth it if the term stays the same? Surely it only benefits me when I come to remortage?

At the next junction when you have to fix the rate, it will be calculated at the balance remaining at that point. If you pay off more now, when your current interest rate is lower, you are paying off against the actual loan. If you don't then you will pay off more for interest.

Paying more early = less pain later. It might be harder now, but the alternative is if you don't, the future might be impossible.

Throw every spare penny you have at overpayment, it may be the difference between not being able to afford the mortgage after the next rate adjustment for some people. Even if you save the money now in your account, that would be worth less than the amount that same amount with interest added on.

 

[kona786]

It benefits you because of the amount you save in the long run as interest is calculated in the whole amount.

Yep and he can manually reduce the term come remortgage/renewal time.

 

[McBain]

Fixing in at 3.75% for 10 years madness or not? This whole hitting 6% lark is making me nervous.

 

[Martynt74]

Fixing in at 3.75% for 10 years madness or not? This whole hitting 6% lark is making me nervous.

I would say so, worst case it drops to 2% again and you pay the ERC to get out and the lower interest rate saves you a chunk of cash. Best case it hits 6% and you're quids in.

It's all guess work though and with all the reports, i'm surprised anyone is offering 10yrs at 3.75%

 

[Raymond Lin]

Fixing in at 3.75% for 10 years madness or not? This whole hitting 6% lark is making me nervous.

I am fixed at 3.58 for 2 more years (did it 2 weeks ago).

Don't think just do it.

 

[Surveyor]

It's all guess work though and with all the reports, i'm surprised anyone is offering 10yrs at 3.75%

From a quick search 3.76% with Barclays at 80% LTV (£1,034 fee) then it's all above 4%. A higher LTV and you're up to 4.94% with Nationwide.

 

[McBain]

Yeah this is with Barclays, who are my current lender. LTV in the 70ish range, just above.

 

[ChrisD.]

Yeah this is with Barclays, who are my current lender. LTV in the 70ish range, just above.

I’d take it. Saves moving lender and the legals.

 

[omnomnom]

Yeah this is with Barclays, who are my current lender. LTV in the 70ish range, just above.

Take it. 100%.

 

[Robi]

My 90% LTV 2.69% fix with HSBC ends in December. The best options I can see with HSBC at 75% LTV are:

5 year fix at 3.82% with £999 fee
2 year fix at 3.95% with £999 fee

A quick look on a comparison website throws up NatWest 5 year fix at 3.80% with £995 fee, whereas the HSBC 2 year at 3.95% is the best on the market.

I'm swaying towards the 5 year with HSBC at 3.82% right now. Sensible?

 

[kona786]

I’d take it. Saves moving lender and the legals.

There is no legal cost to the customer when renewing. Even when changing lenders. The new lender pays for that in house.

If borrowing extra then yes.

 

[ChrisD.]

There is no legal cost to the customer when renewing. Even when changing lenders. The new lender pays for that in house.

If borrowing extra then yes.

I didn't say there was, but you still have to deal with all the paperwork/online forms and potentially a full valuation rather than desktop or drive by. By that point the new lender may have pulled their products.