Possible to extend the fixed rate term for a mortgage

HaX · 11 Jan 2007 at 19:01

Hi there,

Took out a three year fixed rate mortgage on our house back in July. Was wondering if it is possible to extend the term of a fixed rate - eg to 5 or 10 years once already within the mortgage repayments?

Cheers

HaX

[TW]Fox · 11 Jan 2007 at 19:03

No, you can't avoid the interest rate increases by doing this

scorza · 11 Jan 2007 at 19:32

You can switch to another mortgage to get their fixed rate - but you'll probably have to pay a redemption penalty.

Rotty · 11 Jan 2007 at 20:07

bit hopefull there

they will probably allow you to extend if you ask but it will have a higer rate and possible redemption penalties

Shifter_Hull · 11 Jan 2007 at 20:28

you be better switching mortgages
what ever penatly charge your given im sure the gains would be more in the long run

HaX · 11 Jan 2007 at 21:08

The thing I'm scared of, is if they keep putting interest rates up to combat inflation. Come three years (when my mortgage is up for renewal), we could be looking at some hefty rates!

scorza · 11 Jan 2007 at 21:14

HaX said:
The thing I'm scared of, is if they keep putting interest rates up to combat inflation. Come three years (when my mortgage is up for renewal), we could be looking at some hefty rates!

Thats the general idea of interest rate rises - increase people's mortgage rates and encourage saving thus reducing people's disposable income and reducing inflation. Time to start belt tightening I'm afraid. I'm looking to buy somewhere this year - so have the same problem

HEADRAT · 11 Jan 2007 at 21:25

In the U.S. you can fix the rate for the term of the entire mortgage, not a product our banks will even offer us :mad:

All this stuff about low interest rates in carp anyway, houses now cost twice what they did 4/5 years ago, therefore the mortgage is larger, therefore the amount of interest over the term is greater.

Current inflation is to do with the knock on effects of fuels costs going through the roof, nothing consumers could do about that one, so this is just a double whammy!

GRrRRrrr

HEADRAT

Hades · 11 Jan 2007 at 21:29

I'm currently in the process of buying (even though I'm convinced the housing market is going to take a nosedive - I'm getting this at a superb price

). So we have a 10 year fixed rate mortgage arranged. The redemption penalties on it are a bit scary though

JohnnyG · 11 Jan 2007 at 21:32

I wouldn't worry about it mate, not 'til early 09 anyway when you can assess the best option for you again.
No-one knows where the rates will be then so if you were to tie yourself in for 2-7 more years you might regret it.
Just try and make sure you keep up to date with your payments then every lender will offer you their best deals at that time.

HaX · 11 Jan 2007 at 21:33

Thankfully when purchasing our house, I was having to commute a long distance to work in a tech support job. Running a car to do this was costing me £400 a month including petrol and insurance etc. I have now found a job closer to home on a similar wage and no longer need to run the car, so am over £400 a month better off.

Like many people who have just got on the property ladder, we've had to make sacrifices and have had to make reductions in our life style. Eg less holidays etc. I think we'll try and hold onto our house no matter what. I love where we live. Providing rates don't go to anything stupid like they did in 89 we should be ok.

Hades · 11 Jan 2007 at 22:08

HaX said:
Like many people who have just got on the property ladder, we've had to make sacrifices and have had to make reductions in our life style. Eg less holidays etc. I think we'll try and hold onto our house no matter what. I love where we live. Providing rates don't go to anything stupid like they did in 89 we should be ok.

But rates don't need to go to the same levels as 89 to cause the same impact now. We've been through a period of very cheap credit which has contributed to massive house price inflation. So people are now borrowing massive amounts at relatively low interest rates. Even small increases can have a large impact to affordability. It's made even worse by many people now opting for interest only mortgages.

HEADRAT · 11 Jan 2007 at 22:11

Yep, if interest rates top 10% and we go into a economic slowdown (people start losing their jobs) it will make the 80's look like a tea party. It's a fine line the Bank of England need to tread, too little then inflaction, too much then it could be recession!

HEADRAT

Samtheman1k · 12 Jan 2007 at 08:46

HEADRAT said:
In the U.S. you can fix the rate for the term of the entire mortgage, not a product our banks will even offer us

You can get 10year fixed rates though, so not far off!

Samtheman1k · 12 Jan 2007 at 08:48

HEADRAT said:
Yep, if interest rates top 10% and we go into a economic slowdown (people start losing their jobs) it will make the 80's look like a tea party. It's a fine line the Bank of England need to tread, too little then inflaction, too much then it could be recession!

HEADRAT

But that's the point in the rate decisions being done by the BOE, not the government, if we start heading towards a recession, then they will lower rates to give it a kick start to prevent it.

TC1 · 12 Jan 2007 at 08:49

What's a 'Mortgage?'

Finished mine last year!!

HEADRAT · 12 Jan 2007 at 08:54

Samtheman1k said:
if we start heading towards a recession, then they will lower rates to give it a kick start to prevent it.

Problem is that by then the damage is already done and why using interest rates is a bad way of managing the economy.

HEADRAT

Manlove is my forte · 12 Jan 2007 at 09:03

HaX said:
Thankfully when purchasing our house, I was having to commute a long distance to work in a tech support job. Running a car to do this was costing me £400 a month including petrol and insurance etc. I have now found a job closer to home on a similar wage and no longer need to run the car, so am over £400 a month better off.

Like many people who have just got on the property ladder, we've had to make sacrifices and have had to make reductions in our life style. Eg less holidays etc. I think we'll try and hold onto our house no matter what. I love where we live. Providing rates don't go to anything stupid like they did in 89 we should be ok.

Why not use that £400 to over pay your mortgage? If you have less outstanding debt, then you will have less interest to pay on that debt. Also, any money you invest now will save you about 3* that level throughout your mortgage (going on todays interest rates)

TC1 · 12 Jan 2007 at 09:17

I had a 'Flexable' Mortgage. Tried to pay off as much as i could. Helped a lot.

scorza · 12 Jan 2007 at 09:29

Kronologic said:
Why not use that £400 to over pay your mortgage? If you have less outstanding debt, then you will have less interest to pay on that debt. Also, any money you invest now will save you about 3* that level throughout your mortgage (going on todays interest rates)

A lot of mortgages don't allow overpayments or set it at a low limit like £500 per year.