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Fixed Rate Mortgage Advice

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Comments

  • allan673
    allan673 Posts: 1,213 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    dave cdti sri,

    hi, your 6.4% 3 year fixed rate isnt bad at all to be honest. i would stick with it if i were you.
    you dont say what you owe, but im guessing there would be no point at all in paying an erc and moving to another product. due to the fees involved. you wouldnt be better off.
    rates could rise just as quickly as theyve dropped, anythings possible with this crap government and the state of the country. i know where your coming from about people being bailed out.its the normal working guy that seems to get shafted left right and centre at the moment by the clowns running the country. they havent got a clue how we live. i could go on and on lol.

    im personally on a 10 year fixed rate of 5.15%, as i like the security of knowing what im paying. as i cant afford a gamble on trackers etc - it suits me.
  • beecher
    beecher Posts: 2,497 Forumite
    I'm pretty sure that there is small print within the mortgage that does say if the base rate rises by X amount then a increase could be inccured. Not the other way though.


    You'd be wrong then as that's completely inaccurate.

    If you bought last year at the top of the market, your house will be worth a lot less than it was then. So you're very unlikely to be able to get a new deal unless you put down a hefty deposit at the time.
  • I'm guessing that if you had a 3yr fixed rate at 6.4% a year ago then the amount of deposit you put down was less than 20%.

    Just doing a very generic search of 80% deals shows the lowest rate at 5.09%

    On a £80k mortgage over 30 years then the difference would be around £65 per month.

    If the ERC on paying off your current mortgage was currently 2% then that would be £1600.

    So it would take over 2 years to actually recoup the ERC (that's not taking into account any set up costs for the new mortgage or interest charges on the ERC being added to the mortgage for the next 30 yrs)

    Some brokers would love to help you in the current times because you would be their dream customer - chasing the lower monthly payment, because if that is what's important to you then they can justify doing the remortgage. However, is it really in your best interest? I don't think so.


    Obviously the above is a very simplistic scenario - your property will almost certainly have gone down in value and so the above rates may not be available to you - they are there to illustrate the point!
  • dwsjarcmcd
    dwsjarcmcd Posts: 1,857 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Hi Dave,

    I'm in the same situation. In time of "EXCEPTIONAL FINANCIAL CIRCUMSTANCES" as recognized by the government, where everybody is being bailed out, why my mortgage should be bound by rules drawn up for a different scenario.
    Banks are making huge amount of money out of people with a fixed mortgage in a way that in my view is bordering with profiteering.

    This morning I logged a formal complaint with my lender and to my surprise they said that if more people complained they will be forced to review the situation. Get on the phone.

    Cheers
    Luigi

    Don't you think there is a contradiction in terms here, on the one hand you talk about banks being bailed out, on the other profiteering!

    Lenders 'buy' money in at the prevailing rates when you took out your fixed rate. That is the rate they need to pay for the life of your fixed rate. It doesn't drop because interest rates fall. They are not profiteering but they may make a small margin on it but as a % mark up it is minimal.

    You, and as many other as you want can complain formally but it won't achieve anything.
  • Hi, Can anyone answer two hopefully simple questions for me.

    1) My mortgage is in two parts. About 80k on a fixed till Feb 2010 and 20k (added when we moved) on fixed till Mar 2009. Both with Halifax. Question is can I transfer small part to another lender and leave large sum with Halifax?

    2) Although on a fixed rate, when Halifax changed SVR last year my monthly payment dropped about £20. Does this affect the amount of capital I will have repayed at the end of the fixed period or is it just I'm paying less interest (calculated as if I'm staying with Halifax for next 20 years etc)

    Thank You
  • Chippie
    Chippie Posts: 96 Forumite
    Trying to follow your logic...but why the banks and god knows what else had to be rescued with tax payers money?

    Sorry Grumpy, I don't understand your question.
  • Chippie wrote: »
    Pure speculation on your part and in fact totally incorrect. If I bet on a horse tomorrow and it loses, do you think the bookie will give me my money back?? You paid your money and made your choice. Live with the consequences and grow up....... or don't sign any more legally binding contracts until you are grown up enough to accept the consequences. :confused:

    Under normal conditions I would agree with you, but these are emphatically NOT normal times. Any bank that takes tax-payer support by means of a bail-out needs to accept that the rules of the game have changed and they need to show a little more respect for their customers. If the banks aren't allowed to experience any downside potential (i.e. collapse as they would have normally done) then why should the consumer? They can't have their cake and eat it.

    In my opinion the banks should have a long hard look at any fixed-rate deals agreed over the last few months and renegotiate the terms (some are already doing this), as they have been nothing more than albatrosses round the necks of the consumer from day one. It looks like rates will be low for years, so what future benefit has anyone who agreed new fixes since, say, September got out of them? Certainly not worth the product fee. I do agree however, if the fix has been in place for more than a few months, you really have no cause to complain as you have at least had some benefit from it.
  • Bromley86
    Bromley86 Posts: 1,123 Forumite
    And yet, if dwsjarcmcd is right and the banks buy that money in at a fixed rate, then you're suggesting they should take a loss? And, by extension, that the taxpayer should be exposed to more risk to help people who fixed to avoid risk?
  • Hi Dave,

    going back to your original question and taking into account some useful comments posted, heres what to have a look at:-

    Look at the terms of your deal and find out what the rate will be once you come out of your fixed term. For example you may be on a deal which is say 0.99% above Bank of England base for the rest of the term. If this is the case, then look at the cost of what your early release charges are with your lender. Ask them if this rate would still apply or would the deal have to be re-structured. If it does have to be re-structured then it may be hard to find a low tracker rate as lenders are all reviewing what they offer.

    Once you know this then you can decide what is the best move forwards. It is good times for people on low tracker deals at the moment, however nobody knows what is around the corner and if rates for some strange reason decided to go through the roof again, I very much doubt you would find a rate as good as you have at the moment.

    A call to your lender will open the way for your information, however please read all the small print of your deal so that you are not shooting yourself in the foot for the long term.

    The very best of luck.

    IAKW
  • Bromley86 wrote: »
    And yet, if dwsjarcmcd is right and the banks buy that money in at a fixed rate, then you're suggesting they should take a loss? And, by extension, that the taxpayer should be exposed to more risk to help people who fixed to avoid risk?

    Not sure I follow the extension in your logic, I suggested no such thing... the banks net source of funding has got significantly cheaper in the last few weeks so they are actually making more of a profit from the recent fixers than the original fair-value calculation suggested i.e. the NPV of these fixed rate deals has increased significantly due to the much shallower yield curve. Consistenly paying a higher rate than the SVR is not the sort of riskless transaction I would choose.

    As I said, a lot of banks have repriced rates (or allowed cancellation) for people going onto fixes to more realistic levels, with more realistic margins - while still making a profit. I don't see why all banks who took government recapitalisation can't do this for this group. As I said, these are exceptional times, and if the dynamics of the market had been allowed to run as normal, these banks would be in a lot of trouble. It's hardly unreasonable to expect them to show the same munificence in return.
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