I never said wait for a crash, I said leave some room in the budget to cover increase in costs, especially when interest rates are at all time lows. It was obvious interest rates will go up and with it, mortgage costs will follow.
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
I never said wait for a crash, I said leave some room in the budget to cover increase in costs, especially when interest rates are at all time lows. It was obvious interest rates will go up and with it, mortgage costs will follow.
Got a meeting with Halifax in a few minutes to see what they can offer to fix us at (half of our mortgage ends in July 2023)... What you guys reckoning a 5 year product swap 60% LTV is gonna be nearer 7% than 6%?
If you had access to whole market. 5-6pc
That's what's available for while market search at 75pc
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It's impossible to predict though. Nobody should be mocked in 1 years time for taking out a 2 year mortgage at 6% if rates go down to 4%. They might go up to 10%. I think this is the point some are making in this thread.... to be kind. Not saying you aren't. Just that 99.9% of the British Mortgage Paying public are not financial experts and make the best decisions they can based on time and situation.
Yeah. In 2025 when re renew, I'm very well aware that rates may be at a level where we'll lose our home. But when we bought back in 2020 having rented for 18 years, if I didn't get on then, when would I? You can always find argument to put it off and every time you do, prices go up even more and you'll just never do it. Buying a house maxing yourself out is not necessarily reckless. We're all just trying to live the best possible life. It's a choice between buying or not buying. We don't get to buy and have a good, easy deal. It's buy and get wrecked or rent and get wrecked and also never own a house. So many try to buy. Can't really blame people for that.
I totally understand your points. I've got another 3.5 years on my 1.24% fixed deal and I'm piling every spare £ I can into an "overpay" fund. If the rates are still 6-8% when my fixed period ends, likewise we'll have to sell up and downsize. All of my budgeting and forecasting was around rates settling at 3-4% long term which were affordable for us. 6-8% is very much unaffordable though.
No one talks about terms with mortgages. Rates are going up, but you can increase the term if you are struggling. We are paying quite a lot (25% of take home pay each) but we took out a 15 year term. If things get bad then we can just increase the term.
@jaybee & @ci_newman - surely this means you wouldn’t have to sell? Just extend the term…
@jaybee & @ci_newman - surely this means you wouldn’t have to sell? Just extend the term…
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I agree with you, ideally people would stress test themselves and predict the very obvious that interest rates could only go up. Not disputing that.
The thing is some people are in situations where they can't just "pick somewhere cheaper". The first house they need to buy is a 3 or 4 bed as they have kids/family and they may live in the South East. That's 350k+ straight away anywhere round here. Picking somewhere cheaper is not an option so the choice is either to keep renting, slowly eroding your savings and ability to raise a deposit whilst rent goes up and house prices go up. A rent trap. The first opportunity people get to buy, they generally try to take the opportunity even if stretching. Difficult to criticize that when people have been renting and giving thousands to landlords for years and years.
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I think most of us had to go at least 4x income due to the way house prices were increasing.
I reckon we were at about 4.5x household income at the point we took our mortgage out. If we were to take it out today it'd be about 3.25x.
Current LTV is hard to work out as the prices in the area has grown quite a bit since we moved in 3 years ago, and none of the neighbours have sold in the last 2 years to use as a benchmark. So just going off the lower bound of the Zoopla estimate would put us around 55% LTV.
And if one is already on 30 year term maxed out where it takes me up to beyond retirement age?
We could downsize if any of my kids have been able to move out since then. Chances of them being able to afford to do that unless they become overnight youtube sensations...
I'd agree with this. It's better to extend your mortgage term than be forced to sell up just to downsize.
The terms are only relevant if you stick to the minimum monthly payments. For those of us under 40 you could potentially get at least a 30 year term.
I already have a term that takes me to retirement age (I was planning to overpay anyway).
Man of Honour
Yeah that's the problem, circumstances have changed so we're a bit stuck in that regard.
Are we counting household income as net/take-home or gross?
We bought house for £250k, 20% deposit so 80% LTV meaning £200k @ 2.05% for 5 years. Net household income sits somewhere around £49k so we're just over 4x income to mortgage ratio. We could take the hit up to about 5% without issue, we'd just be sending a lot less to savings. Luckily other outgoings are reasonably low.
EDIT: Plan to overpay as much as we can after our wedding, meaning about 2.5 years of the term left. Hopefully that brings down the debt level and keeps us in good stead for LTV value should house prices fall (and remain down).
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Yeah that sucks. Any reason why you can't go whole market?
Man of Honour
Circumstances (earnings) have changed.
Turns out they are still offering what they mentioned the other day, 4.4% 5 year fix... I was happy to go that after doing maths at 3.93% so it's really not that bad. Going to say we're OK to go ahead with it and then do some more maths to ensure I'm not brainwronging.
Ah yeah I understand.
If it's affordable and you can still have a life there's a lot to be said for certainty. Regardless as to if its the financially best call.
And really is gambling anyway to not go for it.
I always think of it.. Worst realistic case.
Worst case going for it you are a few hundred a month worse off over the 5 years, but and probably only the last 2 of those years of rates drop.
Worst case not going for it?
Rates spike, trapped on SVR, etc etc.
Iirc the max the banks would lend was based on gross rather than net. Although I think they do take into account committed outgoings - student loan / credit cards / loans etc.
I had a quick look at https://www.barclays.co.uk/mortgages/mortgage-calculator/interest-rate-calculator/#/interestresults to see what the typical monthly payment would be.
I think we could afford upto 10% but my god life would suck, as we'd be spending literally every penny on household costs. We'd have to cut back on basically every luxury.
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Hi all. Have been reading the thread and thought this looked like the perfect place to ask the following question so signed up immediately:
Very difficult situation. Have mortgage as 2 sub accounts (as ported a few years ago) with Natwest. Part 1 expires early December so locked in the rate a few months ago. Part 2 expires early April and therefore the website says "Now eligible" to lock the new rate in for this as we are now within 6 months.
However when you click on this eligible link it doesn't let you do anything and just gives an error. Spoke to Natwest who said you can only lock part 2 in once part 1 has gone through. This means waiting until mid December which is obviously very concerning.
Surely this means if your part 2 expires a day after part 1 and you locked in part 1 on for example Jan 1st and expire July 1st. You would have to wait until June 30th to lock part 2 in?
I have never heard of this before and surely how can this be the case? Especially if the website says "Eligible".
Any help at all would be hugely appreciated as the dent is really going to cause financial hardship. Thanks very much.
Very difficult situation. Have mortgage as 2 sub accounts (as ported a few years ago) with Natwest. Part 1 expires early December so locked in the rate a few months ago. Part 2 expires early April and therefore the website says "Now eligible" to lock the new rate in for this as we are now within 6 months.
However when you click on this eligible link it doesn't let you do anything and just gives an error. Spoke to Natwest who said you can only lock part 2 in once part 1 has gone through. This means waiting until mid December which is obviously very concerning.
Surely this means if your part 2 expires a day after part 1 and you locked in part 1 on for example Jan 1st and expire July 1st. You would have to wait until June 30th to lock part 2 in?
I have never heard of this before and surely how can this be the case? Especially if the website says "Eligible".
Any help at all would be hugely appreciated as the dent is really going to cause financial hardship. Thanks very much.
Worth reaching out to a broker and see if you can take both products to another provider?
Thanks @Maccy but already using a mortgage broker who unhelpfully says "nothing we can do and should just stick with the offer and then roll part 2 in December as the offer for part 1 was a while ago and the larger of the two parts they said it is worth sticking." - I just can't believe Natwest are saying this given the impact it will have and it is not mentioned anywhere in any documentation at all. And even their website has moved from "Not eligible" to "Eligible".