we are due to remortgage soon from a fix rate thing at 6.79%

the bank of england rate is at 1%, but when can you see that start going up ??

thinking of a varible rate next but not sure about the rate etc??

what do you think??

why remortgage? what does you current mortgage revert to rate wise?

not sure to be honest without looking at paperwork?? should it drop down then??

we have just got a fixed for 2 years with the abbey at 3.99%
might go up tomorrow.. might be 18 months to 2 years.
How do you feel about risk? how secure is your job, and could you cope with 6-12 months on a higher rate you are on now?

Probably goes to their standard variable rate.

talk to a *good* mortgage broker

from memory, charcol were ok

things will be all over the place for a year or two, trackers used to be ideal but they are not available cheaply now

my job is secure for the next 11 years!! (RAF) so im ok that way .

our current mortgage is intrest only so when the fixed rate ends does it revert to a repayment or not??( should i be looking for the paperwork!!)

Probably goes to their standard variable rate.

it Might not go down…

ours was going up by £30 a month

it’ll stay interest only – just the rate will be lower.

Late last year I got a tracker rate as we figured interest rates would drop as the US and Europe had. Fortunately we managed to get a term tracker at 0.85% above base and it came into effect in December…which was nice.

However, can you see rates going lower? I’d say no so I’d get a fix rate. However given the fixed rates on offer are well over the 1% base rate by several percentage points (as opposed to when you could get them at less than 0.5% above base) you might be better off sticking on your present mortgages variable rate

I can only see them going up again in about 12-18 months when we start coming out of recession (that’s a guess BTW). How quickly they go up I couldn’t say, but I’m on a fixed rate & happy to be so.

A friend of mine worked out the differences between sticking with his current fixed rate and a few possible trackers, guessing what the market is likely to do over the next 2 years. After fees, valuations, solicitors etc he reckoned a whopping £200 difference over those 2 years.

Interest only mortgages are ok if you’re planning to sell the property before the term is up, and have plans in place to make up any difference or put towards your next property. Otherwise, if you’re planning to stay put, I’d look at a repayment (capital & interest) mortgage, and overpay if possible when times are good.

yep would like t go on to a repayment mortgage and pay what i am now which would reduce my mortgage by 10years!!

Charcol were good until last week when they started charging for giving any advice at all – people to go to are London and County but ultimately they or any other broker will not advise whether you should choose fixed/svr/tracker etc. For my tuppence if you are in secure emplyment stick to svr for the next few quarters and then go medium term fix because rates will boomerang when the economy starts getting out the unchartered water we are currently in (if they ever do!!!!)

If you had a 90/95/100% deal on your mortgage last time you may find a bit of difficulty remortgaging and have to go on standard rate. Depending on how long ago you bought though.

gwaelod – I was about to ask that question. Our fixed ends in 1 year I think, we’ll drop onto the variable rate but wasn’t sure if we’d be able to remortgage unless we put in an (imaginary) lump sum to get down to 80 or 85%.

Is a remortgage only when you adjust your borrowing or change provider? i.e. would we be able to get a new fixed term with current provider or does that count as a remortgage?

Renton – from your questions I’d seriously recommend you seek some sort of financial advice, perhaps citizens advice or other free service, as it sounds like you aren’t 100% clear on the impacts of the various options. As a minimum I’d look for a better understanding between interest only and repayment. It used to be the case thay interest only was available to customers providing a side by side investment used to redeem the capital at the end (e.g. a PEP) but somewhere along the lines banks abandoned that and I’m at a loss as to how someone on interest only expects to pay the capital at the end. Someone did once suggest that the mechanism was compulsory downsizing at the end of the mortgage term but that sounds pretty undesirable to me. Even more important at current inflation/deflation rates.

cheers for the advice digimap.
i am aware of the differences between interest only and repayment.

we took a 2 year fixed interest only mortagae to start with as my wife isnt working and it dropped the payments at the time.

now ive been looking around and probably get a good deal paying roughly what i pay now but also as a repayment mortage and also shorten the term.

im just not sure of taking the gamble between fixed or variable due to the state of the economy??

Renton – definitely go and find your mortgage paperwork.

I came out of a fixed rate in December. I didn’t bother doing anything and just assumed I would revert to the standard variable rate. However I received a letter in the middle of December informing me my new rate would be 3.75% which was less than my fixed rate. Thinking the bank had made a mistake and would end up chasing me for money when the error was noticed, I phoned up and discovered my new rate was base rate plus 0.75%, and since the base rate at that point had dropped to 2% my new rate would be 2.75%. There is no lower limit on the rate and I am now at 1.75%. 😀

So definitely check your motgage paperwork you MIGHT get a nice surprise and not need to change anything.

im going to check when i get home but im sure that when the fixed rate ends it will still be interest only.??

yep would like t go on to a repayment mortgage and pay what i am now which would reduce my mortgage by 10years!!

If you’re on an interest only mortgage, there isn’t any ‘number of years’ to reduce. You still owe exactly the same as you did when you started (minus any overpayments you made), you’ve just been renting your house off the bank for 2 years.

In terms of variable rates – they can’t get massively lower, and the banks have priced in the drop in interest rates, so any variable rate you can get now is going to be quite high.

Joe

6.79% is pretty expensive, you should be able to get something around the 4% mark.

It used to be that the standard variable rate was way higher than the fixed deals, so you were advised to get a new mortgage when your deal ran out. However now, with the Nationwide (that’s who I looked at) the variable rate is way lower than the new mortgage deals.

When you took out the interest only mortgage, what mechanism was in place to pay it off at the end – did you take out an endowment or something similar?

Even if you are still on an interest only mortgage, if it is still a lower rate than you can get elsewhere, you would be better off sticking with it and using any extra money to overpay the mortgage to reduce the capital – if the terms of your mortgage allow.

As was said above you probably need some professional advice – but do try and find someone who is genuinely independent.

when i leave the air force i get a bif lump sum and a pension (starting at 43) so this was the mechanism to pay it off but, i would really like to switch to a repayment mortgage and pay some of it off .

we paid 128000(the chap needed a quick sale so we got it cheap as it need work doing, houses on same road were 150 at the time) for the house 2 years back, got a mortgage for 124000 and have completely renovated it.

current value is between 135 and 140 so will this be took into account when remortgaging??

spookyb329…almost certainly that will count as a remortgage…ie you’ll be ripping up the current deal with your lender to start a new deal.

Give Furness building society a try, we got a great deal this time last year, though that was before recession!!

You can sometimes switch between repayment and interest only, but it might mean having to get a new deal which might mess you up.

If the deal you drop onto with your current mortage is good, then you might be better off finding out how much you can overpay on it- as that’ll reduce the amount you owe. Some of them let you overpay loads (like 10% of the house value a year or even more).

Joe

Yep – I’m with nationwide and was going to remortgage back in Sept when I came off my fixed rate – glad I didn’t.

The news Ive heard is that rates are expected to go down to about .5% or 0% by the summer – hover there for some time and then start to go up in about 18months from now.

Advice I’ve been given which seems to make sense is to wait for 5-10yr fixed rates to go down to 3 or 4% and fix. If you enter into a 2yr fix now it will run out just as interest rates have started to go up and you’ll not get a good rate.

All this is speculation though and its quite a gamble really.

Renton, yes when you remortage they’ll take into account what the value of the house is at that time – that’s why so many people are getting in trouble – they are trying to get new mortgages for actually more than the actual current value of their houses.

If you take your worst case, you owe £128k and the house is worth £135k – £7k difference which is borderline to getting you any decent deals. If you drop onto a decent base rate with your current supplier I’d be tempted on that and possibly start up a savings fund (or stocks and shares ISA if you’re brave) for your overpayments – you might need that little lump sum to get you a better deal in a few months…

Oh, and check the fine print of the mortgages. Some cheeky lenders were charging an purchase fee, exit fee, admin etc. – we found some of the higher rates were better value when you worked out the total cost over the whole period of the deal.

If you take your worst case, you owe £128k and the house is worth £135k – £7k difference which is borderline to getting you any decent deals.

Yeah, when go onto Nationwide’s site it lets you choose between borrowing 65% or 80% (or something). 95% or 100% wasn’t an option 🙂

watch out for long fixed rates – they can have significant early repayment charges. other than that, seems like a good plan there bushwacked

Renton – Get yourself some proper advice from qualified mortgage advisors. Make sure they are whole of market and not just independent and speak to a couple not just one. Before you sit down with them though give some thought to what you would feel comfortable paying on a monthly basis for your mortgage as this will help in the advice process and when looking at going fixed or tracker/variable etc and what term to run the mortgage over.

Where as people on here do know about mortgages and what has worked and not worked for them in the past and you will get a real range of opinions i doubt many of them are qualified to give you advice on your mortgage and what the best rates are out there on a daily basis, which lenders criteria you fit etc, this is where an advisor comes in useful.

P.S. Avoid Charcol at all costs as they will not provide as good a level of service as your local advisor will do and will nearly always charge you for the privilige.

Good luck

breatheeasy – Member
If you take your worst case, you owe £128k and the house is worth £135k – £7k difference which is borderline to getting you any decent deals. If you drop onto a decent base rate with your current supplier I’d be tempted on that and possibly start up a savings fund (or stocks and shares ISA if you’re brave) for your overpayments – you might need that little lump sum to get you a better deal in a few months…

Can i just play devils advocate for a minute and point out that doing this is all well and good in the short-term but if house prices continue to fall as many expect them to and then interest rates increase, and the increase could be quite sudden as happened in 2003/2004 you may be stuck on a climbing variable rate with not enough equity left in your property to get a good deal. I also doubt you will have been able to save enough to increase your equity by reducing your loan to value in a 12 month period unless you are very lucky.

Just a thought thats all 😐

Oh and remember that fixed rates are priced against the wholesale markets (swaps rates) and so don’t have to follow the bank base rate, in fact last month this rate increased slightly so there is no gurantee that, even if the bank base rate goes any lower, the fixed rates will reduce.

If you are unsure about what you are doing with a mortgage get advice from advisors and if you are really unsure then get advice from advisors you can sit down with face to face and not over the phone like London & Country offer.