End of fixed term on mortgage-what next?

ray1971

My current mortgage fixed rate is due to end next April and I was wondering what happens when it's 'up for renewal'. The reason I am asking is because I have heard that in some cases due to the current financial climate lenders are not offering mortgage products at this end of fixed period stage, and wondered if this is true, and if so what happens regarding the mortgage/property etc. If anyone has had experience of this I would be greatful for any advice. My current lender is the Woolwich and the mortgage I have is an interest only mortgage.
Thanks very much.

Kirri

It should say somewhere in all the paperwork what will happen - mine just went onto a tracker at the end of the fixed rate so it dropped considerably, no one got in touch with me or anything, I just had a new notification of payment price. When I went into the branch they tried to sell me a new mortgage deal though.

ray1971

Thanks Kirri.

Has anyone though had a different experience and had a struggle to get the lender to continue the mortgage as I have heard a few cases of this a while ago and wondered if it is still happeniong?

bris

The fixed term just means the deal you were on for x amount of years has finished. You mortgage would have been based typicaly on 25 years, you will now revert to the base rate + whatever is in the agreement, again typicaly about 2%. most people find they are now better off after a fixed perod ends as the base rate is so low. check you aggreement or phone your lender to put your mind at rest.

blueberrypie

ray1971 wrote: »

My current mortgage fixed rate is due to end next April and I was wondering what happens when it's 'up for renewal'. The reason I am asking is because I have heard that in some cases due to the current financial climate lenders are not offering mortgage products at this end of fixed period stage, and wondered if this is true, and if so what happens regarding the mortgage/property etc.

Some people are finding it hard to find a new mortgage product, this is true. However the end of your fixed-period does not mean you have to find a new product - you can simply continue with the mortgage you have. Find the KFI (Key Facts Illustration) that you received when you took out the mortgage - there will be details on that about your follow-on rate. That's what you'll move onto at the end of the fixed perio.

If anyone has had experience of this I would be greatful for any advice. My current lender is the Woolwich and the mortgage I have is an interest only mortgage.

Woolwich mortgages usually go onto a tracker rate - depending on when you took your mortgage out, this might mean you are going onto a much lower interest rate than you're on at the minute, which will decrease your monthly payments.

Do you have a plan for paying off the capital on your mortgage (rather than just continuing to pay interest forever)? If your interest rate and monthly payments are falling, you might want to consider continuing to pay the same amount - the extra you pay each month will go towards paying off your mortgage (and in every subsequent month you will therefore pay a little bit less interest and a little more of your payment will go towards the capital).

col553

My 5year fixed rate with Skipton is coming to an end November (4.59) Skipton have offered me a 4year fixed rate of 3.99 with no fees. How does this sound.
I am tempted to go with the deal but not sure if i can do any better

de1amo

my fixed rate ended about 3 years ago and has now settled at 1pc apr-i was on about 4pc in the term so its been a good thing --in 2009 everyone here was extolling the virtues of getting a new deal at somewhere near 5pc because rates were bound to go up--im still waiting!!

jamesd

ray1971 wrote: »

Has anyone though had a different experience and had a struggle to get the lender to continue the mortgage as I have heard a few cases of this a while ago and wondered if it is still happeniong?

The lender has a legal obligation to continue the mortgage on the originally agreed terms so long as you continue to make the payments.

Those originally agreed terms will normally involve a transfer to some variable rate after the end of any introductory deal or fixed rate period. Lenders are fully entitled not to offer a new deal and to leave you on the original one and it's something that has been happening a lot as borrowers with high loan to value that used to be acceptable may not meet the current lending criteria for a new deal.

It's now normal and recommended practice to calculate affordability for interest only mortgages as if they were repayment mortgages. That may mean that you fail a current affordability test even if you passed one to get the original deal. They may also calculate based on an assumed interest rate of five or six percent instead of the actual rate, to allow for higher rates in the future. It's also increasingly likely that you will need to prove that you have a repayment vehicle like a pension or S&S ISA in place when seeking an interest only mortgage.

ray1971

Mortgage value £180,000, property value £250,000 earnings £30k, so lets hope they offer me something eh??

de1amo

why hope?? you will probably be better off on the standard variable rate than going onto a deal costing a set up fee and probably be on a rate higher than their svr--its all in the mathes--go on your lenders site and see the deal they are offering to exisiting lenders--my lender's site offers deals to make me worse off

jamesd

Income multiple of six? That'll take a lot of hoping even at 72% loan to value! Chances are that you'll find yourself on the variable followup rate with no deal offered from any lender. No harm trying, though you're probably going to find the variable rate cheaper than any other deal you could qualify for.