Mortgage Rate Rises

Syla5 · 29 Jul 2022 at 11:22

krooton said:
So I could fix for 2 years at a decent rate, only up £150/month from my current deal, but as I am 270 days away from the deal ending, it'd be a £4.6k ERC, lol

Projected increase (currently) would be +£600 month when the deal ends, so the above would save £450/month over 2 years (£10.8k), meaning the net benefit after the ERC would be £6.2k saved.

Problem is, I would need to pay the ERC in a lump sum, can't add it to the mortgage, so I am SOOL.

Need more information here.

Whats your outstanding mortgage, LTV, interest rate, and ERC % rate? Also what would you save if you extend the fix period etc?

Theres options where you can pay the ERC and get the money via remortgaging as well.

krooton · 29 Jul 2022 at 11:37

Currently I am fixed at 1.28%

danlightbulb · 29 Jul 2022 at 11:56

@krooton difficult position to be in. Big ERC now, any new deal now more expensive anyway and rates on the up.

Many people in your position are going to be absolutely screwed.

krooton · 29 Jul 2022 at 12:05

danlightbulb said:
@krooton difficult position to be in. Big ERC now, any new deal now more expensive anyway and rates on the up.

Many people in your position are going to be absolutely screwed.

Yep, I basically have 9 months for crypto to save my butt :cry:

413x · 29 Jul 2022 at 12:23

krooton said:
Yep, I basically have 9 months for crypto to save my butt

I think that's unlikely, sad times.

Yeah I the time of paying ercs I nearly at an end. If you can't add erc to remortgage, and you can't pay it in cash, you're fairly restricted to whatever comes.

krooton · 29 Jul 2022 at 12:25

413x said:
I think that's unlikely, sad times.

Yeah I the time of paying ercs I nearly at an end. If you can't add erc to remortgage, and you can't pay it in cash, you're fairly restricted to whatever comes.

Project launches next month, and if it all goes according to plan, I should be able to stump up for the ERC

413x · 29 Jul 2022 at 12:47

krooton said:
Project launches next month, and if it all goes according to plan, I should be able to stump up for the ERC

Probably a tough call right now of erc vs wait it out

Jonny ///M · 29 Jul 2022 at 12:48

caff said:
I would get in as early as you can - either with your existing lender or going via an efficient mortgage broker who can secure a rate asap.

There is a likely +0.5% BoE base rate rise when they meet on the 4th August.

Once people see 4%+ interest rates everywhere on 2 year fixed deals, reality will start hitting home about how much they can afford.

I'm with Nationwide and looking to stick with them, earliest I can lock in a deal is 1st August which will then kick in from October or November I think. It has been a slight blessing in disguise being used to a 3%+ as this feels like less of a blow. I'd hate to have maxed out our borrowing at about £180,000.

dLockers said:
What is your LTV now? It works both ways - you've cleared more $ but the bank will have revalued your house (presumably increased). You could be pleasantly surprised...

Bought at £115,000 with a mortgage of £103,500. Owe £99,000 right now and they estimate the house at £130,000 which drops to 76%. I'd throw some money I to it if getting to 75% LTV helped get a much better rate.

dlockers · 29 Jul 2022 at 13:39

Jonny ///M said:
Bought at £115,000 with a mortgage of £103,500. Owe £99,000 right now and they estimate the house at £130,000 which drops to 76%. I'd throw some money I to it if getting to 75% LTV helped get a much better rate.

Yeah that's the exact thinking you need. I think 75% is the cut off too.

Syla5 · 29 Jul 2022 at 13:47

krooton said:
Currently I am fixed at 1.28%

snip

Ouch yeah i see where your struggle is, also rates have shifted a lot in the last month, benefit of hindsight you needed to lump up the ERC 2 months ago and switch on to a 10 year fix, however those rates are now up from 2-2.4% to 3.5-4%!

I would honestly only now consider ways to prepare for the price hike at the end of your term, maybe you could call the bank and arrange a term extension on the overall mortgage increase it to the max, then save the extra cash. Then when you move on to the SVR or your next fixed term/tracker period, you overpay and reap the benefit of bigger saving on interest cost when the rates are higher.

413x · 29 Jul 2022 at 20:16

Syla5 said:
Ouch yeah i see where your struggle is, also rates have shifted a lot in the last month, benefit of hindsight you needed to lump up the ERC 2 months ago and switch on to a 10 year fix, however those rates are now up from 2-2.4% to 3.5-4%!

I would honestly only now consider ways to prepare for the price hike at the end of your term, maybe you could call the bank and arrange a term extension on the overall mortgage increase it to the max, then save the extra cash. Then when you move on to the SVR or your next fixed term/tracker period, you overpay and reap the benefit of bigger saving on interest cost when the rates are higher.

Its basically matched the base rate rises.
Just under 2pc to 3.5pc in 4-5 months

Jonny ///M · 29 Jul 2022 at 23:23

dLockers said:
Yeah that's the exact thinking you need. I think 75% is the cut off too.

Had a proper look tonight. Hopefully these stay similar come Monday.

86% LTV if I do nothing. We started out on 3.49% which is £517pm

79% LTV

74% LTV

caff · 30 Jul 2022 at 00:17

Jonny ///M said:
Had a proper look tonight. Hopefully these stay similar come Monday.

86% LTV if I do nothing. We started out on 3.49% which is £517pm

79% LTV

74% LTV

Firstly, I note that for all options you've selected "No product fee". Is that your choice? Because - generally - paying a fee up front is better over the term.

APRC is annoying, because it's rounded to 1d.p. But my advice is: if the APRC is the same or lower for "fee paid up front" than it is for the other two options, then choose "fee paid up front".

Whatever you do, I'd try and secure a rate before 4th August. If you can afford an overpayment to get you to below 75%, do it now.

On or around 4th August, rates will jump universally by at least 0.5% (but more likely 0.6% as others have said), so the quicker you switch the better.

OldKitMan · 30 Jul 2022 at 00:24

those nationwide rates have increased by 1.95% since the start of the year compared to a 1% increase in base interest rates (based on it being 0.25% on Jan 1st). I took a 5 year fix at 1.64% on 19th January (based on my LTV of about 20%) so that rate of 3.59% could easily jump to 4.4% or thereabouts if there is a 0.5% hike in the base rate coming up.

Jonny ///M · 30 Jul 2022 at 00:46

caff said:
Firstly, I note that for all options you've selected "No product fee". Is that your choice? Because - generally - paying a fee up front is better over the term.

APRC is annoying, because it's rounded to 1d.p. But my advice is: if the APRC is the same or lower for "fee paid up front" than it is for the other two options, then choose "fee paid up front".

Whatever you do, I'd try and secure a rate before 4th August. If you can afford an overpayment to get you to below 75%, do it now.

On or around 4th August, rates will jump universally by at least 0.5% (but more likely 0.6% as others have said), so the quicker you switch the better.

This is my first time switching a product as it's my first mortgage so wasn't entirely sure what to do.

Unless I'm calculating it wrong the lower LTV are actually cheaper to not pay the product fee upfront?

86% LTV
Fee paid upfront £999+ £31,020 = £32,019
No fee = £32,280

79% LTV
Fee paid upfront £999+ £30,864 = £31,863
No fee = £31,804

74% LTV
Fee paid upfront £999+ £30,241 = £31,240
No fee = £31,007

EvilRob · 30 Jul 2022 at 01:20

Jonny ///M said:
This is my first time switching a product as it's my first mortgage so wasn't entirely sure what to do.

Unless I'm calculating it wrong the lower LTV are actually cheaper to not pay the product fee upfront?

86% LTV
Fee paid upfront £999+ £31,020 = £32,019
No fee = £32,280

79% LTV
Fee paid upfront £999+ £30,864 = £31,863
No fee = £31,804

74% LTV
Fee paid upfront £999+ £30,241 = £31,240
No fee = £31,007

Are you only looking at your current lender?

413x · 30 Jul 2022 at 06:48

Things don't suddenly change when the BoE announce changes.

Syla5 · 30 Jul 2022 at 10:50

413x said:
Its basically matched the base rate rises.
Just under 2pc to 3.5pc in 4-5 months

Not really. 3 months ago I was looking at a 10 year fix at 1.79%. Started my process at the start of June for 2.39% and now the same product is 3.89%, so that’s 2.1% in 3 months when base rates have gone up from 0.75% to 1.25%.

jon86 · 30 Jul 2022 at 12:30

My wife and I live in the USA and have a 30 year fixed rate mortgage at 2.5%. Adjustable rate mortgages do exist in the USA (where the fixed period is less and you move to SVR after the fix if you don't remortgage), but many homeowners here choose to fix the mortgage over a 15 or 30 year term. We paid "points" (upfront fee) to reduce our mortgage to 2.5% (from closer to 3%) and it had a 6 year payback period. We have no overpayment penalties on the mortgage so can overpay as much or as little as we like.

I just checked mortgage rates today and the average 30 year fixed as of yesterday was around 5.13%.

200sols · 30 Jul 2022 at 12:32

Syla5 said:
Not really. 3 months ago I was looking at a 10 year fix at 1.79%. Started my process at the start of June for 2.39% and now the same product is 3.89%, so that’s 2.1% in 3 months when base rates have gone up from 0.75% to 1.25%.

They've anticipated the future rises I guess, shame they don't do the same for savings rates...