Booking Fee Question - Rate Change

JoeShmoe_2

We are moving our mortgage at the end of the year to a FD offset mortgage. We had paid a booking fee to secure a rate of 6.19% for a 10 year fixed rate offset, were accepted and have the paperwork to sign and complete

The rates have now come down to 5.95%. Can we phone them and get out on the lower rate without having to pay an additional booking fee? Or will they have to put us through the whole acceptance process again?

lisyloo

Hi Joe,

The booking fee is for the privilege of securing the rate.
If rates had gone up then FD would have been committed to the rate you booked.
Therefore they will not refund this booking fee.

Yes you will have to pay another booking fee, but you will not have to pay for the valuation twice or the original arrangement fee (only the new arragnement fee).

I am pretty sure they are non-negotiable on this and to be fair you did "book" their commitment to the rate.

Hope that helps
Lisa

straddie

Lisa is right. However, whilst you forfeit the booking fee you have already paid, you do not restart from scratch so do not have to go through the entire process again. You basically need to ring them up and request the new rate; they'll send you a new KFI in the post for you to read over. You then ring them up within 4 working days to pay the new booking fee and secure the rate. They will then issue you with a new offer document for you to sign and return. You will not need to redo all the legal paperwork, valuation or credit checking.

We're in the same boat as you, in that we secured the 6.19% deal. However, we're holding fire before rebooking the cheaper deal just in case rates drop again (we have a few weeks until we need to drawdown). If rates were to drop a second time and you'd already switched deal once, you'd have to pay yet another booking fee to switch again.

Obviously you may not have time to wait and see, and there's always the risk that the next movement will be up rather than down, but assuming you have budgeted for 6.19% and can afford it, it wouldn't be the end of the world if the gamble backfired and you missed out on a cheaper deal. That's our thinking anyway.

FD say they need around a couple of weeks at least to process a product switch so make sure you don't leave it too late.

Bevann

I also posted a question on this as I'm in a similar situation. I did phone up my lender (Nationwide) and was told that I would have to pay the booking fee again. However someone posted on my thread that they phoned up their lender and were put on the new rate without being charged any fees. They were with alliance and leicester, so it may be worth a phone call to check, particularly if you are with alliance and leicester.

Mrs_Chicken

I'm in a similar situtation - booked the 10yr fix when it was 5.99%, but we are now pretty sure we want to switch to the offset fee-free tracker (also 5.99%), in the hope that the base rate drops as we head into recession next year. The lack of ERCs is also appealing, as we would like to move in say, 5 yrs time.

We are due to draw down on 1st October - would you suggest that I inform FD of our decision now? (I too was waiting in case rates came down again, but I guess there's only so long you can wait!)

Also, apologies for hijacking the thread, but Lisa - I recall you were thinking about making the same change as me, from fixed to tracker - do you still think this is sensible?

Alternatively, we could switch now to the 5yr fix at 5.95%, as we have now decided that we definitely don't want to be tied in for more than 5 yrs. I've been flipping back and forth between fixed and tracker, all the usual issues, simply can't make a final decision!

Thanks

Lindsey

mrmajika

Mrs_Chicken wrote: »

Alternatively, we could switch now to the 5yr fix at 5.95%, as we have now decided that we definitely don't want to be tied in for more than 5 yrs. I've been flipping back and forth between fixed and tracker, all the usual issues, simply can't make a final decision!

Can't really offer any help or assistance. This is merely a 'me too!' post.

I have yet to pay the booking fee and have until Friday to verbally confirm to them what i'm wanting to do.

I have thus far plumped for the 5 year fixed rate @ 5.95% but I am considering the tracker.

I'm hanging off to see what happens tomorrow with the interest rates.

lisyloo

I'm hanging off to see what happens tomorrow with the interest rates.

I'm not sure you'll get much joy tomorrow with inlfation so high above target.
However I do think that rates are going to drop in a few months.

Of course you have to think of the long term and it's practically impossible to predict anything except the short term with interest rates.

BTW - I'm currently booked on the 5.99% deal (the one that was before the 6.19% one) and I'm thinking of changing to a tracker too, but holding fire, because as straddie says I don't want to swicth twice.

Locoblade

One other thing to consider regarding the tracker and intending to jump onto a lower fix later on, is if you're near the current LTV thresholds and house prices drop you could be in a position where although rates have dropped in a year or two's time, you won't be able to remortgage onto a better rate at that time because your LTV has gone up above say 80% for FD mortgages, or even worse above 100% and be unable to remortgage full stop.

If this happens in conjunction with a significant rate rise, you could end up stuck on the tracker for several years paying more. As always though, its swings and roundabouts.

straddie

With regard to the outlook for interest rates, the likelihood of cuts took a bit of a dive with Darling's comments at the weekend - sterling plummeted, something a rate cut would further exacerbate. The effect of this is to push up the cost of imports (food, oil etc) and consequently feed inflation.

That's not to say cuts are definitely off the agenda just now. But what it does go to show is how quickly sentiment can change - we previously went from "rates going up" to "rates going down" virtually overnight, and we could easily experience the opposite some time. It'll be interesting to see the minutes from this week's MPC meeting in a couple of weeks to see their assessment of the current situation.

We are due to draw down on 1st October - would you suggest that I inform FD of our decision now?

If it was me I would do so within the next week. Definitely wait to see what happens to rates tomorrow though (my guess is nothing).

straddie

Hah how ironic - http://forums.moneysavingexpert.com/showthread.html?t=1134435

JoeShmoe_2

Well we have a window until Xmas and even then we could potentially sit on the HBOS variable rate for a few months to wait for the best deal.

The deals get withdrawn because the credit crunch obviously still means there is no liqudity in the markets, thus no money to lend. as soon as they get snapped up. Were hoping this eases a little bit or indeed that HBOS did a decent fixed rate deal for existing customers towards Christmas

Im pretty sure rates wont go up with the current econmoic growth numbers- and weve paid 400 quid for the safety net of 6.19 if they do -but the belt tightening we are all doing and the drop in oil should lessen inflationary pressure when it fliters through in 2-3 months hence a chance of at least a small cut towards the end of the year when those recession numbers will be really biting - so I guess it's hold tight

Like you though we could have gone and paid another fee and secured 5.95 but who's to say there wont be better around by November time? As yet we havent even asked HBOS what they'd do but my current account/savings is all with FD anyway so were in the right spot to offset if we want to

Just need to be patient I think