Bank of England Rate and Trackers

marshallka

I have a mortgage with IF that says it tracks 1.7% above BOE but I am still paying 4.7% on this. That means that they have not passed the rates on yet and this 3.00% was the interest rate back in November, 2008. Is this how these work? Do they usually take this long (been one 4th december down to 2% - still not passed, 8th Jan down to 1.5 - still not passed and then 5th Feb down to 1% - still not passed and then 5th March down to 0.5% and still not passed). If they have take 6 months to pass on one of the rates then how long for others. I really do not understand this.

opinions4u

Ring them.

Some mortgage lenders don't change monthly payments when interest rates change but do apply the new rate to the account.

Then they review the monthly payment annually - if you have effectively overpaid during the year your new payment will allow you to effectively underpay for the following year.

It saves them sending out a letter every time the BofE changes rates.

I don't know if IF do this, hence my suggestion that you call them.

Here's a link that may explain:

https://my.if.com/help/jargonbuster/glossary_mortgage_payment_option.htm

Alternatively - you're being ripped off, but I suspect it's a beneficial way of the offsetting concept working in your favour.

marshallka

We had a discounted mortgage before and opted for the yearly change in interest to be applied instead of monthly. Perhaps that is the case again although I can not see anything in their terms and conditions etc to say this. It does however say that interest will adjusted within 30 days of the change to BOE base rate.

Does this mean we will lose out or if this is yearly are the extra amounts we pay now taken off the capital???

opinions4u

marshallka wrote: »

We had a discounted mortgage before and opted for the yearly change in interest to be applied instead of monthly. Perhaps that is the case again although I can not see anything in their terms and conditions etc to say this. It does however say that interest will adjusted within 30 days of the change to BOE base rate.

Does this mean we will lose out or if this is yearly are the extra amounts we pay now taken off the capital???

If it is being done the way I suggest, you capital will be reducing more than originally planned. This will be reversed when the payment is recalculated and the debt will be allowed to rise (or fall slower) to the position you would have been at.

Moozles

I'm a yummy mummy!
:j

ooops wrong forum!

Fliss_M

I dont know if IF do, but as their part of Halifax they may. And thats a cap. Some accounts, halifax and nationwide are 2 I believe have caps on their trackers. It will say on your key facts document. And if it doesnt and you call them and they say thats why, you have a case for having it dropped. The alternative above is also posible, so fingers crossed for that

marshallka

opinions4u wrote: »

If it is being done the way I suggest, you capital will be reducing more than originally planned. This will be reversed when the payment is recalculated and the debt will be allowed to rise (or fall slower) to the position you would have been at.

So I would be better to ask for my repayments to be calculated daily instead of annually then perhaps?

marshallka

Fliss_M wrote: »

I dont know if IF do, but as their part of Halifax they may. And thats a cap. Some accounts, halifax and nationwide are 2 I believe have caps on their trackers. It will say on your key facts document. And if it doesnt and you call them and they say thats why, you have a case for having it dropped. The alternative above is also posible, so fingers crossed for that

No cap on my tracker. I have sorted it out now thanks by ringing them and also I did not know that i could view everything online from each transaction etc.

I am paying 2.2% (I thought it was 4.7%) and that is 1.7 above BOE base rate at the moment but making interest only payments (not changed them to capital and interest yet) but making overpayments too on the interest so in fact the capital is reducing. We ran into financial difficulties and ended up with paying just the interest last year and then changed over the mortgage and they have carried this on with just the interest but they actually collect more from us so we are near on paying the full amount on 3/4 of it:o. I will have to try and get this sorted whereby we put some away each month for the other part. Need to juggle the finances again and do a bit more robbing peter to pay paul so to speak.:o

opinions4u

marshallka wrote: »

So I would be better to ask for my repayments to be calculated daily instead of annually then perhaps?

Broad as it's long. So a personal choice I'd say.

I will have to try and get this sorted whereby we put some away each month for the other part.

Yup. Try to get on top of it and pay more than you ever have to in order to get rid of it.

Although another plan would be to look for savings products paying more than 2.2% net (e.g. 3%+ ISAs and regular saver type accounts) and pay the excess money in to those. When the mortgage rate goes higher than the savings rate that's the time to cash in the savings and move the funds in to your offset or simply reduce the capital.

marshallka

opinions4u wrote: »

Broad as it's long. So a personal choice I'd say.

Yup. Try to get on top of it and pay more than you ever have to in order to get rid of it.

Although another plan would be to look for savings products paying more than 2.2% net (e.g. 3%+ ISAs and regular saver type accounts) and pay the excess money in to those. When the mortgage rate goes higher than the savings rate that's the time to cash in the savings and move the funds in to your offset or simply reduce the capital.

Thanks for that, Like I said, times hit rock bottom but with the rate reductions now we are hoping to get back on track some time. Just had the cam belt go on the car and lots of vet bills too so this month has been a no no. Lets hope next month and so on get better.:o