Mortgage Advice

[Flashheart]

I can confirm I am not the new CEO of Swindon Town F.C.

Yeah, you would say that though, wouldn't you?

[Hunk]

I can confirm I am not the new CEO of Swindon Town F.C.

Yet another ITK’r 🙄

[Samdy Gray]

I might be interested in my namesake's former role though.

[flammableBen]

Morning all, Mrs D and I are thinking of moving to a more expensive property. What we'd like to do is just pay interest only, as we will sell up and move to a smaller house in 5-10 years.  We'd be putting in 60-70% equity and when we sell we will pay off the whole loan and use whatever is left to buy our final house.   The reason for the post is, would lenders be ok with this plan or not.  If not, how could we make it work? Cheers in advance.

Don't know why but I read "Mrs D" as paulD's wife. Juicey.

[wheretherealredsare]

Are Offset Mortgages still available there?

[Berniman]

I can confirm I am not the new CEO of Swindon Town F.C.

Thanks, you didn't look anything like him last time we met..

[Samdy Gray]

Are Offset Mortgages still available there?

Yes

[Bob's Orange]

I'm pretty sure the answer to this is yes (and is aimed at Samdy mainly but I know there are plenty of other people that know their shit on here), but our 2 year Fixed Rate is coming to an end in Feb 2023 and we are only able to negotiate a new rate from 1 December. (Probably going to be hiked about 3-4 times the current rate depending on how today's announcement goes)

We're potentially being faced with an increase of somewhere between £300-400 per month looking at online calculations which is clearly crippling. I do potentially have the ability (by raiding longer term investments i.e 'piggy banks') to pay somewhere close to the maximum overpayment in 2022 as well as doing the same in early 2023 which I assume would be beneficial in order to reduce the monthly payments as much as possible? Finally, given the current Interest Rates and the future challenges, when it comes to negotiating, should I be looking at Fixing Rates at 2,3 or 5 years etc?

[Nemo]

Really tough time to be coming to the end of a mortgage rate, there's really no option that doesn't involve paying significantly more and there's enough uncertainty around that there isn't a clear "right" answer as to what to do next.

The Bank of England projections seem to suggest that they expect a pretty grim 2023 and interest rates to carry on at this rate or there abouts for at least the next 18 months or so. Obviously prior to this last 10 years or so, a 3% base rate isn't historically high, but I think we've all got used to near zero borrowing (and house prices have shot up even further as a result).

https://www.theguardian.com/business/2022/nov/03/bank-of-england-interest-rates-higher-uk-economy - here's the BOE signalling that they don't want to raise rates further, but the markets seems to suggest it may climb further.

Samdy will know better about what the right thing to do is, but I think a shorter term fix (2yrs) is probably better than a 5 at the moment as you'd hope the rates would be stable or on the way back down again in 2 years time. As for overpayments, I think (and maybe this is also wrong) it's simply a case of whether the rate you're getting on investments is higher than you'd pay on the equivalent borrowing from the mortgage. With most (all?) providers, you can pull back overpayments if you suddenly find yourself needing the cash.

[Jimmy Quinn]

I can only assume you’re banking on continuing house price increases? What happens if the market goes into reverse?

Too risky for me nearly got fingers burnt with an endowment in the 90's plus house prices could plummet around the time you want/need to sell.

[4D]

Base rate up to 3% now

[dagrumpymunki]

I'm pretty sure the answer to this is yes (and is aimed at Samdy mainly but I know there are plenty of other people that know their shit on here), but our 2 year Fixed Rate is coming to an end in Feb 2023 and we are only able to negotiate a new rate from 1 December. (Probably going to be hiked about 3-4 times the current rate depending on how today's announcement goes)

We're potentially being faced with an increase of somewhere between £300-400 per month looking at online calculations which is clearly crippling. I do potentially have the ability (by raiding longer term investments i.e 'piggy banks') to pay somewhere close to the maximum overpayment in 2022 as well as doing the same in early 2023 which I assume would be beneficial in order to reduce the monthly payments as much as possible? Finally, given the current Interest Rates and the future challenges, when it comes to negotiating, should I be looking at Fixing Rates at 2,3 or 5 years etc?

Keep your eyes open over the next couple of months. A lot of the fixed products available at the moment we're out together during the bin fire that was the Liz Truss Premiership during which the BOD was talking about rates having to go up to 6% or more and everyone was totally losing their shit.

Oddly we seem to be going through a period now where BOE base rates are increasing, but a lot of lenders are adjusting rates downwards, because they allowed for this rise and more in their initial reactions, and the Bank are now assuring them that they're not likely to go above 4% base rates in the next 18 months.

In the teeth of the impending recession it feels unlikely the MPC will exceed this over that timescale, even if they continue with their totally fucking spurious  claims that it's an effective tool against inflation. And you have to assume that inflation will peak soonish as the impacts of the energy cost rises have to have had their full impact on prices soon, and then inflation rates will stabilise (as rates are simply the difference in prices of a basket of goods this month compared to this time last year, as soon as the last year's price starts to have been impacted by the Putin factor then rates of inflation will fall).

You are going to take a hit but it's worth looking at a tracker with your existing lender because the rates on these are significantly lower than fixed rates (especially 5 year fixeds) at the moment even allowing for today's rise. But I'd not be making a decision yet because that gap might close over the next couple of months if lenders have confidence in the BOE Chairs assurances.

[Samdy Gray]

Lumps has pretty much nailed it. The fixed rates available now are artificially high because banks initially panic priced and then started playing a game of wanting to be more expensive than each other so they don't get overwhelmed with applications.

My own deal ends in March and I'll be taking a tracker deal. Most lenders have relaxed their rules and will let you do that 6 months early so it's worth checking now BO if you haven't already. You can opt to move onto the new deal after the current one ends, not straight away, so you get the benefit of a few more months at your current cheaper rate.

I've been keeping an eye on SONIA forecasts which are basically a proxy for BoE base rate. After the clusterfuck of a mini-budget it was peaking at 5.9% next July, but it's fallen back to a peak of 4.8% now. As Lumps said, once this inflation works it's way out of the system then there will be pressure to reduce the BoE rate quickly.

It might get a little bit painful in the short term, but I reckon a tracker will be the best option until things settle rather than locking into a guaranteed high rate for 2, 3 or 5 years. It's telling that that the cheapest fixed rates are 10 year deals, usually you have to pay a premium for that peace of mind.

A note on tracker products - make sure the basis for tracking is the BoE base rate and not the lender's own SVR. With the latter, a lender can choose to note pass on base rate reductions and some have even been known to increase their SVR when base rates have been falling!

Given that today's BoE increase and at least the next few are already 'baked in' to current fixed rate products, there could be some more competition in the next few months and banks could start to reduce rates again once they have a bit more certainty and know they're not going to get swamped with applications.

In terms of paying off a chunk, Nemo has it right, in simple terms if you're paying more interest on your mortgage than you're earning on your investments it makes mathematical sense to pay down debt. But then there's the lost opportunity cost of having that money available in the future, so really it comes down to personal circumstances and choice.

[Legends-Lounge]

I’m in the skool of I don’t give a fuck about mortgage rates. Selfish? No, not at all. I’ve paid like others 15%-16% before black Wednesday. Made sacrifices to pay each months payment. Not had holidays, didn’t go out on the piss and eating out. Did things on the cheap if I had to. I was still better off than our parents who had less beans to play with than Jack did with after selling his cow on the way to market.

Today’s generation live beyond their means and have to many trivial ‘essential’ things to spend money on and no financial discipline. Of course my observations are a generalisation but compared to my parents I’m minted. I don’t see it like that but I am like many of my peers much better off. The rub is it has taken to nearly retirement to achieve this. The younger generation see people as coffin dodgers and a drain on resources, of course they do, why wouldn’t they? Until they themselves become aged old coffin dodgers.

There is no such thing as a free lunch.

I’d like to thank my old bank manager at the former HSBC in old town for my repayment tracker based mortgage @ 1% above base.

It’s a tough world out there folks. Overtime and second jobs are nothing new. Been there, done that and worn the tee shirt.

[Jimmy Quinn]

Exactly that and also remember paying 14.5% interest rate in the early 90's and working seven days a week.