Mortgage help

chewybacca

Hi,

I was a first time buyer 3 years ago and I've now had a letter saying my deal is up. I currently have a SVR at 3.19% with the Coventry.

The new figure offered is 4.75% SVR or they can do me a Fixed at 5.59% (this may be a little higher, may have the figure wrong).

The new SVR will cost me an extra £90 per month, whilst the Fix will cost me around £150 a month more.

The mortgage was for £107,500, and 100% being borrowed.

What do people think my best bet is? any insight much appreciated!

If I've missed anything let me know.

Thanks in advance.

C

Cannon_Fodder

There's a strong likelihood that you are in negative equity - you don't mention having made any overpayments.

So, you will probably have to stay with your current lender.

Don't quite follow the two SVRs...

Ok 3.19% was the follow on rate from your current deal.
But 4.75% is what? a follow-on rate from a new deal, or it IS the new deal - a tracker?

Do they think you will swap from a 3.19% to a 4.75% without any gain/deal period?

Your current follow-on SVR should be that, follow-on, until you decide to re-mortgage. If the 4.75 doesn't offer any other element to attract you, you should be able to stay on the 3.19% SVR, afaik. Check the small print.

The SVR might be ok for a few months, but when rates rise will the same Fixed deal be available still?

5.59% isn't bad for 100% LTV.

chewybacca

Thanks for the response Cannon,

No overpayments made. don't really understand negative equity, any help?

When i first took the mortgage, the SVR rate was higher but due to the economic crisis its gone right down to what it is today. I used to pay more than I am now.

Not sure i am familar with 'follow-on' sorry.

I'm not sure about this current rate ending, I don't understand how it works, I assume that when we got the deal it was a 3 year agreement that was to be reviewed at this point in time.

VIGILANT22

negative equity

Buy a house valued at £107500.00
Take a mortgage for 100% £107500.00
Credit crunch arrives, house prices & values drop, the house previously valued at £107500.00 is now only worth £100000.00 however yr mortgage has not reduced by same amount. Therefore you have a mortgage for more than what the house is worth = Negative Equity...........

dimbo61

When you took out your mortgage with Coventry was it fixed for 3 years at say ( 4.5%)???? and at the end of the period it reverted to the SVR which is 3.19% at the moment ( the follow on rate).
Now your home may have little 95% LTV or no equity 100% because you borrowed 100% of the purchase price and have paid very little off the mortgage in the first few years.
You can either overpay as much as you can afford while on the SVR or take the 5 year fix for security ( your choice)
Dont fix for a long time if you intend to move in the next few years!

chewybacca

Thanks peeps, you're all very helpful.

The original rate was never fixed. it started at say 4.75% and over time fell with the base rate, to what it is today (3.19%).

now this original rate is finishing and I'll go straight onto another SVR of 4.75. This in all fairness will never get less and the base rate is about as low as poss, right?

Why not fix if intending to move? sorry

C

dimbo61

If you fix for 5 years and then decide to move in 2/3 years unless the mortgage is portable then you will have to pay ERC ( early repaymnt charges) when you pay off the mortgage and move to another lender for your next property!
Use "whatsthecost" to work out how much your mortgage will cost you extra each month if you went for the 5 year fix at 5.59%.
Its only 0.84% more and that works out about £50 a month more on a £100K mortgage and gives you security for the next five years

dimbo61

Sorry how long is the 5.59% fix for ?
I had in my head it was for 5 years ( I may well be wrong !)

chewybacca

Hi dimbo,

The fix offered is 5 years, checked the old paperwork and the product i started on was '1.55% discounted SVR 31/3/2010' so thats why we now have been offered a new SVR.

I asked and if i let this drop onto the new SVR as offered, i can then move of fix in the future, so would it be wise to take the SVR and review when rates start to pick up?

Is re-mortgaging, moving provider? or when you want to borrow a diff amount?

Ta C

Noble_Savage

chewybacca wrote: »

Hi dimbo,

The fix offered is 5 years, checked the old paperwork and the product i started on was '1.55% discounted SVR 31/3/2010' so thats why we now have been offered a new SVR.

Hi chewybacca

Your original deal wasn't a fixed rate, but a discount. With a discounted deal, your rate is x% or so below the lender's SVR, so it will move as the SVR moves. What's happening now is that your original discount is coming to an end and you're simply going back to the SVR.

I asked and if i let this drop onto the new SVR as offered, i can then move of fix in the future, so would it be wise to take the SVR and review when rates start to pick up?

I used to have a mortgage with the Coventry and they offered me a range of deals to move onto when my original deal ended. It was a good option for me at the time, as I didn't have to go through all the hassle (and added expense!) of moving my mortgage to another lender. I think the range they offered me was their full range that new borrowers could choose from. It might be worth asking them if they still do this?

Is re-mortgaging, moving provider? or when you want to borrow a diff amount?

Remortgaging typically means moving your mortgage from one lender to another. You might borrow the same amount if you're simply changing deals, although sometimes people borrow more for various reasons, like home improvements.

chewybacca

Hi Noble Savage,

The fix i refer to is the 'other option' i have, so when i mention that i was doing so in response to dimbo. Sorry to confuse everyone

I think (i realise its a gamble) that i'll take the SVR and see how the market goes, if the base rate stays low for another year, i'll be better for paying the SVR amount rather than the year at the fix rate.

then see where i am in a few more months.

Knowing my luck the base rate will jump!:p