Mortgage Rate Rises

jaybee said:
Happy new year all. A joyful thread to bump in January!
I am within 6 months now and with HSBC. Never remortgaged before so was trying to start the process today to lock something in early just on the off chance rates sky rocket between now and June, despite that I'm sure they will come down a little bit.

1: How do I find out the value of my property? Do I just go with the average between the free zoopla and right move?
2: What happens if I apply for a rate which is within an LTV band which ends up to not be the case due to what HSBC value my property as? I assume I will just be refused that rate and given the next one up?
3: If I apply for something with an arrangement fee like the ones that are say £999, can I still make it come off the balance when it starts, meaning I won't have to pay a penny to "lock in" now, or will they need to take something up front to lock me in? If the later, can I get that money back if and when I find a better deal nearer the time?
4: If I lock in early as an existing HSBC customer, are there any disadvantages to doing that where HSBC won't allow me to switch to one of their own better deals nearer the time?
5: Is it worth just waiting until February anyway when BOE are likely to cut rates slightly anyway?
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1. Go with a best guess based on that and other stuff for sale in the area but they will get someone out to value it regardless.
2. They will likely refuse that mortgage offer and you will have to re-apply for a new one based on my experience.
3. depending on the provider they will usually offer different deals with different options, one of them is to add the fee to the mortgage balance.
 
jaybee said:
Happy new year all. A joyful thread to bump in January!
I am within 6 months now and with HSBC. Never remortgaged before so was trying to start the process today to lock something in early just on the off chance rates sky rocket between now and June, despite that I'm sure they will come down a little bit.

1: How do I find out the value of my property? Do I just go with the average between the free zoopla and right move?
2: What happens if I apply for a rate which is within an LTV band which ends up to not be the case due to what HSBC value my property as? I assume I will just be refused that rate and given the next one up?
3: If I apply for something with an arrangement fee like the ones that are say £999, can I still make it come off the balance when it starts, meaning I won't have to pay a penny to "lock in" now, or will they need to take something up front to lock me in? If the later, can I get that money back if and when I find a better deal nearer the time?
4: If I lock in early as an existing HSBC customer, are there any disadvantages to doing that where HSBC won't allow me to switch to one of their own better deals nearer the time?
5: Is it worth just waiting until February anyway when BOE are likely to cut rates slightly anyway?
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4. You can lock in now and can switch later on no problem.
 
jaybee said:
Happy new year all. A joyful thread to bump in January!
I am within 6 months now and with HSBC. Never remortgaged before so was trying to start the process today to lock something in early just on the off chance rates sky rocket between now and June, despite that I'm sure they will come down a little bit.

1: How do I find out the value of my property? Do I just go with the average between the free zoopla and right move?
2: What happens if I apply for a rate which is within an LTV band which ends up to not be the case due to what HSBC value my property as? I assume I will just be refused that rate and given the next one up?
3: If I apply for something with an arrangement fee like the ones that are say £999, can I still make it come off the balance when it starts, meaning I won't have to pay a penny to "lock in" now, or will they need to take something up front to lock me in? If the later, can I get that money back if and when I find a better deal nearer the time?
4: If I lock in early as an existing HSBC customer, are there any disadvantages to doing that where HSBC won't allow me to switch to one of their own better deals nearer the time?
5: Is it worth just waiting until February anyway when BOE are likely to cut rates slightly anyway?
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On point 1 - I went with what I needed the house to be worth to cover point 2. They didn't bother challenging; and said their team were satisifed with a paper valuation.
 
Here's a happy context for the start of 2025 with regard to paying your mortgage off early or saving/investing it instead.

If you have a life insurance policy directly linked to your mortgage (i.e. clears the balance of the mortgage upon death or terminal illness rather than a fixed amount) then by making overpayments to the mortgage you are effectively reducing what would be paid out to your family should the unfortunate happen. Whereas if you let the mortgage run it's course and pay in to your savings instead then your family would benefit more.

Think happy thoughts!
 
Mysterae_ said:
Here's a happy context for the start of 2025 with regard to paying your mortgage off early or saving/investing it instead.

If you have a life insurance policy directly linked to your mortgage (i.e. clears the balance of the mortgage upon death or terminal illness rather than a fixed amount) then by making overpayments to the mortgage you are effectively reducing what would be paid out to your family should the unfortunate happen. Whereas if you let the mortgage run it's course and pay in to your savings instead then your family would benefit more.

Think happy thoughts!
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The best way to succeed in life and be happy is to reduce your outgoings and pay down your debts. One does not live live expecting the unfortunate to happen, by all means have life insurance cover on your mortgage but if the worst does not happen it is a lump sum to look forward to when it does mature.
Letting your mortgage run it's course ensures that you pay the maximum in interest during it's lifetime and judicious paying down reduces that. You also need to consider tax on savings and the mobility of interest saving rates when comparing with your mortgage. It is far simpler to just pay down as much as you can afford when you can afford it. The benefits of being mortgage free are manifest.
 
Mysterae_ said:
Here's a happy context for the start of 2025 with regard to paying your mortgage off early or saving/investing it instead.

If you have a life insurance policy directly linked to your mortgage (i.e. clears the balance of the mortgage upon death or terminal illness rather than a fixed amount) then by making overpayments to the mortgage you are effectively reducing what would be paid out to your family should the unfortunate happen. Whereas if you let the mortgage run it's course and pay in to your savings instead then your family would benefit more.

Think happy thoughts!
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But the counter to this, is that you will have ended up paying loads more in interest, which could go into savings.

I think a lot of people tend to overlook just how much interest they pay on a mortgage over their lifetime. Often hundreds and hundreds of thousands...just in interest. Especially so, now that rates are ~5%
 
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Hagar said:
The best way to succeed in life and be happy is to reduce your outgoings and pay down your debts. One does not live live expecting the unfortunate to happen, by all means have life insurance cover on your mortgage but if the worst does not happen it is a lump sum to look forward to when it does mature.
Letting your mortgage run it's course ensures that you pay the maximum in interest during it's lifetime and judicious paying down reduces that. You also need to consider tax on savings and the mobility of interest saving rates when comparing with your mortgage. It is far simpler to just pay down as much as you can afford when you can afford it. The benefits of being mortgage free are manifest.
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Some life insurance policies that are linked to a mortgage only pay off the mortgage and have no maturity value, so be careful what you pick! This what my post was really about I suppose, if you have a fixed pay-out amount upon the unfortunate event, then it's irrelevant.

I agree that being mortgage free must feel great, but psychology aside you could be doing better with your money.

Jono8 said:
But the counter to this, is that you will have ended up paying loads more in interest, which could go into savings.

I think a lot of people tend to overlook just how much interest they pay on a mortgage over their lifetime. Often hundreds and hundreds of thousands...just in interest. Especially so, now that rates are ~5%
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With each amount of funds available to overpay, you either pay the interest on your mortgage (4.1% for me) or you get paid interest (4.9% cash ISA) if you save it. Select the best logical option but be open to change it too when things change. If you can save enough each year to max your and your partner's ISA allowance (£40K) then that's great, not many can.
 
I understand the cost for the government borrowing will increase but what impact do these gilt rates have on future potential mortgage costs and the BoE base rate?
 
I have always fixed for 5 years at a time. My mortgage is coming off its special rate end of March so I'm looking now. I can't switch early as I'm paying off more than 10% of the borrowing.

I felt 5 years, this time, seemed too long. I do believe rates will stabilise in the mid 3s but may take longer than originally expected. I had expected mid 3s by March 12 months ago.

Likewise, I felt 2 years was perhaps not long enough for rates to calm down. I've gone for 3 year fixed. Fortunately, the difference isn't that much as the borrowing will be relatively low.
 
Bought first home in February 2023 with 36k Mortgage.
Planning to pay it off come this May-August (it's at 23k now)
Can't wait to be rid of it hate the concept of debt.
 
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MatsyLR said:
Bought first home in February 2023 with 36k Mortgage.
Planning to pay it off come this May-August (it's at 23k now)
Can't wait to be rid of it hate the concept of debt.
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36k.. I'm 10x that, wish I could get rid of it quickly. Seeing my mates get 60% deposits gifted by family etc hurts a little, took me long to scrape together the 10% so I'm now paying for the pleasure :(
 
Chris344 said:
Damn. I'm about to proceed on a purchase and have taken a 2 year fixed deal.
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Chris344 said:
How far into the future we are talking? I'm above to fix for 2 years on a purchase.
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Nobody knows. In the short term things are going higher. Could be totally different in 2 years time, and that means higher or lower than today's rates.

If you want certainty you have to fix for longer.
 
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I phoned HSBC today to ask for what my balance would be when my fixed period ends at the end of June. The lady quoted my current balance. I said great, now can you give me a projection of what it will be at end of June, and she said "sure I'll just do a quick calculation". She then goes on to say, well you've got 5 payments to come out before then so it will be X. She's basically just looked ay my monthly direct debit and taken that off the balance multiplied by 5, which obviously does not take into account the interest and how much truly comes off the balance. Is this not mickey mouse stuff for an advisor? I only realised when I got off the phone and worked it out myself.

EDIT: i.e. She was thousands out.
 
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jaybee said:
I phoned HSBC today to ask for what my balance would be when my fixed period ends at the end of June. The lady quoted my current balance. I said great, now can you give me a projection of what it will be at end of June, and she said "sure I'll just do a quick calculation". She then goes on to say, well you've got 5 payments to come out before then so it will be X. She's basically just looked ay my monthly direct debit and taken that off the balance multiplied by 5, which obviously does not take into account the interest and how much truly comes off the balance. Is this not mickey mouse stuff for an advisor? I only realised when I got off the phone and worked it out myself.

EDIT: i.e. She was thousands out.
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The question form me would be, why would you call to ask that when you could have worked it out yourself?
 
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