Mortgage Question (4 Viewers)
- Thread starter Nick
- Start date
chiefdave
Well-Known Member
yep, you move onto variable rate so you're in for a big jump unless they get things under control
chiefdave
Well-Known Member
put your figures in here and mess around with the interest rate and you can see what your payments might be
Unfortunately my fixed rate comes to an end tomorrow. The CBS have told me my mortgage will go up by about £150 a month. Because of this I asked my mortgage adviser to shop around for me and as a result I move to a new provider from Monday with a lower monthly payment. It's definitely worth shopping around
Nick
Administrator
Is that another fixed? What sort of interest rates are you getting? Sorry to be nosey!
Getting a fixed actually proved to be more expensive as they are making them high due to the interest rates instability. It's a tracker (1% above base rate)
Nick
Administrator
Won't that mean that if it jumps up massively it could double etc?
fernandopartridge
Well-Known Member
Yes, that's only illustrative. Their SVR is currently 4.91%
Nick
Administrator
Another £100 a month at the moment
There are going to be a lot of houses reposessed.
SBAndy
Well-Known Member
Yes.
That's always the risk yes. On the flip side though, if by some miracle it drops so will my repayments. Also, I can switch at any time without penalty if a better offer becomes available whereas, if I went for a fixed and a better offer came up, I would need to pay an early repayment fee which can be quite high
Nick
Administrator
Yeah, not sure I'd have the bottle in case I wake up one month and my mortgage has doubled.
Grendel
Well-Known Member
I depends what the base rate forecast becomes so it could if forecasts are correct then be at 7% on a tracker
fernandopartridge
Well-Known Member
I must admit I struggle a bit with why a mortgage that a bank or building society has already granted should be subject to any changes in interest over its life. Why is this passed down to the borrower when it isn't our issue?
Nick
Administrator
I wonder how many people who fix then just carry on with payments after it is no longer fixed and don't think anything of it? Bit like car insurance I guess where people just keep the direct debit going.
It's a piss take really and will see a lot of people homeless overnight. My wage isn't going to go up by such a jump to cover it the bills and mortgage increases
Wish I had fixed for longer now!
shmmeee
Well-Known Member
Yeah I don’t get this. Surely they borrowed the money at the base rate when I took the mortgage out?
fernandopartridge
Well-Known Member
It's obviously some risk sharing thing they do across the mortgage book but like everything is stacked against the consumer
Nick
Administrator
Could be some great value repossessions available thus time next year
There is that.
OffenhamSkyBlue
Well-Known Member
i think it is because the bank/BS has borrowed that money from someone else at something above the BoE base rate. If the rate goes up, they need to pass those increases on to you, as they have to pay it back too. That is why a fixed-rate mortgage is always sold at a higher rate the longer it lasts for - it is to counteract the risk of rates increasing.
I am 7 years in to a 10 year fix at 3.24%, so have been paying over the odds for most of that time, but will be paying distinctly under the odds for the remaining 3 years, if forecasts are to be believed. I will then have to pay it off or go onto another deal or SVR.
shepardo01
Well-Known Member
Our deal - fixed rate - up in Dec...
Just had call with broker - looking at going from paying 850 to 1300 per month over a further extended period!...on the best deal WHAT THE F**K!!??
Just had call with broker - looking at going from paying 850 to 1300 per month over a further extended period!...on the best deal WHAT THE F**K!!??
Let’s hope we don’t go back to the 1980’s rates then 15% mortgages will make yours eyes water.
shepardo01
Well-Known Member
ovduk78
Well-Known Member
You need to speak to a broker ASAP as I think you can exit your current deal when it has 6 months remaining & the way things are going it could be even worse in April.Another £100 a month at the moment
There are going to be a lot of houses reposessed.
robbiekeane
Well-Known Member
Because the cost of borrowing money has gone up. You’re essentially just paying a risk premium on top of the banks estimate of what the cost of borrowing money will be to them over the life of the fixed term. Hence the longer the fixed term the higher the % rate. It’s risk management
You can totally get products that are fixed rates for the life of the mortgage - in fact these types of products are the most standard in the US - you generally tend to fix for 15 year or 30 year terms. The rate though is higher
robbiekeane
Well-Known Member
They’re making them high because they are forecasting significant base rate hikes
It was under 3% just a few months ago.
robbiekeane
Well-Known Member
What was?
shmmeee
Well-Known Member
Could you nationalise the mortgage market?
But why though? I know in practice it’s not a chunk of money borrowed there and then, but effectively it is. It’s basically money for old rope surely?
robbiekeane
Well-Known Member
Because you're not paying the bank back really...
The majority of mortgages aren't actually held by the banks...they're packaged up and sold off as mortgage backed securities to big bad investment funds. Bank says hello Schmee, here's a 200k loan for 2% interest fixed for 5 years. Then the Bank says hey investment fund - do you want to buy this asset and make 1.9% on 200k guaranteed for 5 years? Here you go. Then the bank takes a little piece for themselves. but passes through the repayments.
When the fixed term is up though it's a total reset and it's all based on the cost of borrowing the capital which all traces back to the base rate essentially
shmmeee
Well-Known Member
Yeah but why is that my problem?
robbiekeane
Well-Known Member
Because you agreed to it and you’re posting about it on a message board I guess