Remortgage advice

[Citybreak1]

I can’t renew until Feb 2023 they said. If I remortgage today it’s £400 vs £300 I pay today. If rates go to 6% I could pay £600 per month DOUBLE. I looked at a bigger house for £600 5 year deal but my wife never wanted to go ahead. I could get a bigger place now for less as my house is worth more than I paid. It’s worth 40 grand more plus my equity in the house. The market could fall and I could owe the bank money if I moved.

What do I do?

Sell up and move get a 5 year deal that way?
Remortgage by building an extension
Remortgage take 10k equity out can you do this and use it for a holiday? Can this lock me into a new deal early?
Use savings and pay less a month in feb 2023?
Or just pay double £600 and be ripped off? Maybe take a 2 year deal in hope rates drop? Any advice please

 

[richw]

If you sell up now check your contract as you’ll still pay the probably huge early settlement figure that ends in Feb 2023. After Feb 2023 that early settlement fee won’t be payable.
How much is your early settlement figure for paying off earlier than February 2023? Get an idea of that amount and include it in your calculations for your new monthly payments

 

[najaB]

Any advice please

Speak with a qualified mortgage advisor, rather than seeking advice on a forum. As helpful as we are, you have no way of knowing if the advice you are getting is sound or not and we are under no legal obligation to give you advice that is in your best interest.

 

[Iskra]

Speak to a financial advisor. Worked really well for me re-mortgaging last year coming off a Help to Buy.

 

[DarloRich]

What should you do? Seek advice from a qualified IFA.

 

[DelayRepay]

I echo the advice to take professional advice.

There are some circumstances where it might make sense to pay the Early Repayment Charge, but that depends on how much it would be, which depends on your specific mortgage terms. A professional can help you work it out.

Do not panic though. If you cannot afford the £600 per month, there might be an option to extend the term thereby reducing the monthly payment. Again, a professional will help work through the options.

 

[Citybreak1]

I echo the advice to take professional advice.

There are some circumstances where it might make sense to pay the Early Repayment Charge, but that depends on how much it would be, which depends on your specific mortgage terms. A professional can help you work it out.

Do not panic though. If you cannot afford the £600 per month, there might be an option to extend the term thereby reducing the monthly payment. Again, a professional will help work through the options.

Thanks I was one hour on phone today to the bank seems everybody is doing the same so it’s hard to speak to somebody. Got in touch via the app but it’s a 2 hour response time maybe more. I guess finding out how much the charge is is the first thing to do

 

[DelayRepay]

Do you have your paperwork, that should explain the charge. Sometimes they reduce over time e.g. 2% in the first year, 1% in the second year.

Also sometimes there's no charge in the last three months of the fixed rate period. So read the paperwork carefully if you can't get through to talk to anyone.

 

[MotCO]

There are reports in the press today that some mortgage offers are being rescinded by the banks (I assume this means that the schemes are no longer being advertised, rather than actual offers to perspective buyers have been taken away from them.) https://www.telegraph.co.uk/persona...pull-mortgages-sale-amid-interest-rate-chaos/

It is possible that the mortgage offer you have been looking at may not exist in the near future, so you may not be able to make the savings you thought you could.

 

[Snow1964]

@Citybreak1 Banks will already have withdrawn cheap mortgage, and unless you have paid a deposit to lock in the rate unlikely to get it.

They are all linked to a forward swap rate which has rocketed up, and without getting technical, it’s what International financial market expects to be charged in few years time. Your lender is competing for funds with other banks worldwide. Think of it as they are lining up funds in bulk to be able to issue the next few hundred mortgages they will offer, and if it costs them more, their mortgages will cost more.

Whilst taking an offer or fixed rate if you are not going to move might make sense (there are a few percent penalties if don’t run it to end of fixed period), think very carefully if you try and use extra equity, or extend the repayment period. A few foolish people only look at the savings per month, and completely forget they will pay back extra as they will incur more interest, and be lot older by time they finish paying for it.

Don’t get led into going down the paying interest only unless you have a plan to be able to repay the capital, effectively you are renting from the bank instead of a landlord, and at end of term will have to hand house back if you don’t have the capital to repay a mortgage.

If you want to reduce the interest longer term then should be looking at overpaying and reducing the size of the mortgage.

But if you don’t really understand the options get yourself a mortgage advisor. Or if you are looking at your financial position then get an IFA.

 

[Citybreak1]

I’ve been quoted £842 to exit the deal early

 

[najaB]

I’ve been quoted £842 to exit the deal early

Thanks for letting us know that.

I still stand by my previous advice to discuss this with someone who you know is (a) qualified and fully aware of the market; and (b) under an ethical and legal obligation to give you advice that is in your best financial interest.

 

[Mcr Warrior]

Is it not possible to get a (new) future-dated interest rate fix with the existing lender which doesn't commence until February 2023, i.e. when the existing deal expires?

 

[DelayRepay]

Is it not possible to get a (new) future-dated interest rate fix with the existing lender which doesn't commence until February 2023, i.e. when the existing deal expires?

Some lenders will issue offers which are valid for up to six months. It doesn't have to be the existing lender. However, it is possible that fewer lenders will offer that option in the current marketplace. The advice to speak to an independent mortgage advisor is sound - they will know which firms are likely to make such an offer (if any still are).

What an advisor cannot do, however, is predict what future rates will be. @Citybreak1 will have to make their own decision based on how much they value certainty, but accepting that if they take a five year fix, they could end up with a rate that's higher than the market in future if rates fall.

 

[Citybreak1]

Some lenders will issue offers which are valid for up to six months. It doesn't have to be the existing lender. However, it is possible that fewer lenders will offer that option in the current marketplace. The advice to speak to an independent mortgage advisor is sound - they will know which firms are likely to make such an offer (if any still are).

What an advisor cannot do, however, is predict what future rates will be. @Citybreak1 will have to make their own decision based on how much they value certainty, but accepting that if they take a five year fix, they could end up with a rate that's higher than the market in future if rates fall.

The new rate would be £387 vs £313. I have an appointment tomorrow to sort it. I’m keen to lock in to the new deal as I think if I don’t those payments could bit £500-600 without taking action now.

Is it not possible to get a (new) future-dated interest rate fix with the existing lender which doesn't commence until February 2023, i.e. when the existing deal expires?

February 2023 to start new deal in July 2023. Speculation rates will be atleast 4% by February so I may be forced to act now

No appointment until 25th October then ten days to apple new rate into November. Demanding £842 upfront and can’t pay up either. Rates expected it be 5.5% by November. So can’t win. I can renew by February for free without paying £800. By waiting to November for a new rate I am paying close to the projected 6%! Madness might cancel appointment.