End of fixed term on mortgage-what next?

blueberrypie

ray1971 wrote: »

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

I'm not a professional, but I suspect it's very unlikely that you'll have any choice but to continue with your current mortgage. You're looking at six times your earnings there, and it seems like even four times is getting harder to find.

I asked before if you had some plan in place for paying off capital. You don't have to answer that question, but if you don't, you really do need to think about it. Right now your situation leaves you with very few options. You won't be able to sell and buy another similar property (because you won't qualify for a mortgage as high as the current one - even with Woolwich, even with a portable mortgage). You won't be able to re-mortgage onto a fixed rate if interest rates start to rise. In your shoes, I'd be making it a high priority to get some of that mortgage paid off.

de1amo

i have about the same ratio and got no where with my own lender nor any other,--i have about 30pc ltv

ray1971

I will go home tonight after work and check my paperwork, I think the documentation I received when I set up the mortgage said I will go onto the standard variable rate.The reason I was concerned was due to the fact that I have heard stories of lenders refusing to help any longer due to the current climate plus the amount I need to borrow compared to my salary etc.....this didn't seem a concern when I took the mortgage out 5 years ago but does seem to be now though

de1amo

they wont terminate your mortgage just revert you to the rate that was posted on the sign up contract--most times its the standard variable rate--i have just realised my svr is 2pc not 1pc--i am still not weeping because i have paid a lot more for much less loaned money--i pay 92 pounds on 55k but back in the late 80s i was paying over 300 pounds on 30k plus endowment of 40!!

apart from seeing the rate i would as other people have said really think hard about how you are going to repay some of mortgage--become a mfw before its too late!!

blueberrypie

ray1971 wrote: »

I will go home tonight after work and check my paperwork, I think the documentation I received when I set up the mortgage said I will go onto the standard variable rate.The reason I was concerned was due to the fact that I have heard stories of lenders refusing to help any longer due to the current climate plus the amount I need to borrow compared to my salary etc.....this didn't seem a concern when I took the mortgage out 5 years ago but does seem to be now though

You're confusing two different scenarios though. In one, a borrower is trying to remortgage. In the second, the borrower is just continuing with an ongoing mortgage.

Being at the end of your fixed-rate period means you *can* remortgage if you wish - either with your current lender or another lender - but it doesn't mean you *must*. You can simply allow the current mortgage to continue, paying the SVR for the next 20 (or whatever) years or until the mortgage is paid off.

Given your high multiple, you are (as I said) unlikely to find a lender willing to give you a *new* mortgage. But you do have the current mortgage, and you don't have to do anything for it to continue (except keep making the payments, of course).

So you don't need to be concerned about "not being able to remortgage at the end of my fixed rate" - but you do, I think, need to be concerned about how you're going to start paying off the mortgage capital.

LellyMc

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. 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.

We've just come to the end of our fixed rate and the lender has been in touch offering another fixed rate til Dec 2014.

ray1971

Sorry for any confusion I caused, just to confirm - I took out a 20 year mortgage 5 years ago and the 5 year fix is now ending next year. But like I said, I have heard of cases where people like me who are still 'in' their mortgage periods, have been refused a continuation of their mortgage when the fixed rate period ends,

opinions4u

ray1971 wrote: »

I have heard of cases where people like me who are still 'in' their mortgage periods, have been refused a continuation of their mortgage when the fixed rate period ends,

You heard wrong.

It's possible that their lender may have refused to offer them a new deal. But in this case there will be a contractual "go to" rate at the end of the initial fixed rate - usually called a standard variable rate (SVR).

The borrower will automatically go on to the contractual go to rate at the end of the 5 years. The lender cannot demand full repayment of the mortgage.

getmore4less

ray1971 wrote: »

Sorry for any confusion I caused, just to confirm - I took out a 20 year mortgage 5 years ago and the 5 year fix is now ending next year. But like I said, I have heard of cases where people like me who are still 'in' their mortgage periods, have been refused a continuation of their mortgage when the fixed rate period ends,

Check what your followon rate is before doing anything, Barclays/Woolwich had some of the best tracker(base + <1%) follow ons around 5 years ago so you may be lucky and have an impossible to better mortgage allready.

Next problem is how you pay off the debt!

dimbo61

If you do go onto a cheaper tracker deal then ask your lender to keep the mortgage payment static or even overpay if you can afford too!
Now you took out this mortgage 5 years ago so have you got a repayment vehicle ( endowment?) if not you need to start to pay down the mortgage NOW! even £200/300 a month will help but if you dont you will get to 65 and have to sell your home because you can no longer afford to live there.