What happens at the end of my 125% fixed term? (Birmingham Midshires)

jay_w_uk

OK, so we got the dreaded 125% mortgage. Served its purpose etc.

Fixed rate period ends in 2012, and secured part of the mortgage goes down to standard rate (a good thing as it stands!).

I believe the unsecured part will rise to 10%ish, which is manageable albeit a pain. My worry is that they call in this unsecured loan when the fixed rate ends. Can they do this?!

silvercar

Check the terms. I thought that the unsecured bit was a loan that would be cleared at the end of the fixed time ie it was a loan that would be fully repaid in that time, but maybe not.

Thrugelmir

jay_w_uk wrote: »

I believe the unsecured part will rise to 10%ish, which is manageable albeit a pain. My worry is that they call in this unsecured loan when the fixed rate ends. Can they do this?!

What makes you believe it will rise to 10%? Read the loan agreement you signed carefully. As it will clearly state the basis on which the ongoing rate of interest will be calculated.

Unlikely that the loan will be called unless there's a reason for BM to do so. Is there?

jay_w_uk

Not that I know of!

As far as I know, both mortgage and loan are over a 34 yr term. There's a penalty on the loan interest if you move away from them, and I think this also kicks in if you change products - which going from the fixed period to standard variable is effectively doing?

pwllbwdr

No. Standard variable is not a product, you will probably find it is the default after your fixed term ends per your original mortgage agreement. You may find that your loan portion goes on to the same rate, or it may be a different one.