Mortgage Interest Rate Increase Worry

cpatte7372

Hi Everybody,

I asked a question on this forum in the past and got such good replies I thought I would ask again.

OK, I've just read an article in the Daily Mail 'Millions in cheap home loans trap: 'Zombie' households walking blindly into financial oblivion when rates rise' which scares the hell outta me.

I'm one of the lucky people who had taken out 'Tracker Mortgage' when I purchased my home and my mortgage has gone from £1514 to £415 due to the 0.5% interest rate.

Just like those people in the article I have bitten off more than chew, and I know some of you are saying "I should have been more responsible when I took at the mortgage", however in my defense, I was earning a very good wage and could easily afford £1514/month. I'm now unemployed.

The former Bank of England said the following: 'The former Bank of England expert’s warning about the ‘zombie households’ which could be tipped into financial oblivion when interest rates rise were echoed by a series of finance experts last night'.

I'm one of those individuals that could be tipped into 'financial oblivion' when interest rates rise.

I'm thinking that I should think ahead and take out a low mortgage interest rate. Barclays is offering a mortgage rage called 'Great Escape' at 2.60%.

Can someone advise on the best approach to sheild myself from the inevitable rate rise?

Cheers

Please understand my knowledge in these matters in very limited.

Thanks in advance.

Carlton

haras_nosirrah

Just looked at Barclays online and the great escape mortgage is a tracker at 2.18% above base

What is your existing rate OP?

The other problem is that if you are unemployed you won't be able to remortgage unless you are staying with the same bank and they don't do income checks.

GMS

If you are unemployed you are stuck with your current lender.

They may switch products for you but you cannot remortgage elsewhere until you are employed.

How are you paying the mortgage at present?

beecher2

If you're unemployed, you're not going to be able to remortgage I'm afraid. The Barclays product is a tracker anyway so wouldn't help you when rates go up. You're stuck with what your present lender will offer you so you could contact them.

You're wise to look at your finances and work out what to do when your payment goes up. Is taking in a lodger or even selling up an option to think about?

cpatte7372

Thanks all for responding,

I'm just checking my paper work to let you know what my current rate is. In the meantime, I do believe I will get a job with the next 3 months. So with that in mind can you advise on the principle that I have a job?

Cheers

cpatte7372

Just so you know my mortgage is covered with my mortgage protection insurance...

cpatte7372

Hi,

As I mentioned, the mortgage is a tracker. The rate is 1.340% above the Bank of England base rate. It was taken out in June 2008.

I will try my best to answer any other question you may have.

Your advice is greatly appreciated...

Cheers

cpatte7372

Anybody out there?

haras_nosirrah

The one bit of advise I can give you is that it would be mad to switch from a tracker at 1.34% above base to one at 2.19% above base.

If you do want to fix first ask what your existing lender can offer.

If you get a job then you can check what other lenders have and if you fit their criteria but the barclays one is a no go as is higher than your current rate.

Joe_Bloggs

The key thing is to get another job. Don't worry about reading the Daily Mail skint zombie headlines. Sensationalist headlines sell newspapers.

I did enjoy the "League of Gentlemen's", Mark Gatiss's view on the History of Horror. Robert A Romero was good value. Bleary eyed Zombie Daytime TV presenters should also take note.

I am on a tracker mortgage myself and I am confident that things can only get worse .. or better .. if not stay the same.

J_B.

jamesperrett

Don't let the Daily Mail panic you into doing something stupid. Once you are back in work put as much money as possible into a high interest savings account. When your mortgage rate rises above your savings rate, use the savings to pay off some of the mortgage. Don't be tempted to spend the money in the savings account on anything else.

James.