Fixed rate ending-advice?

shopaholic2

Hi,
Currently we have a £96,000 mortgage with Birmingham Midshires, fixed at 5.67%, ending on 1st June 2011.
The house is worth approx 170,000, we also have a secured loan of £19,000.

The paperwok says that after the 1st June the variable rate will be 2.44%above BBR, to give a current rate payable of 2,94%.

Can anyone advise me what this will mean to the payments?
At present we are om interest only, paying £440 per month.

I dont understand base rates, interest rates etc, and i'm terrified our payments are going to rocket with interest rates going up.

All advise welcomed!

getmore4less

At present we are om interest only,

What are your current plans to pay off the debt?

shopaholic2

My parents have a saviungs account that will pay off the mortgage for us but wont be accessible for about 15 years,i guess they have an endowment in place for us, it was a wedding present.

Just to add, my credit rate is very low,and so we won't be looking for a remortgage as we won't get one!

Thrugelmir

Maintain your payments at £440. Until you make a decision. This will reduce the balance owed and therefore reduce the impact of future rate rises.

shortchanged_2

shopaholic2 wrote: »

My parents have a saviungs account that will pay off the mortgage for us but wont be accessible for about 15 years,i guess they have an endowment in place for us, it was a wedding present.

Wow, what kind parents you have.

However they are not really letting you learn the true value of living costs are they.

originalmiscellany

Wow, your parents aren't looking to adopt anyone soon!? I can have my CV sent to you within the hour Such generosity is as rare as snake oil cooking chickens teeth.

poppy10_2

shopaholic2 wrote: »

Currently we have a £96,000 mortgage
At present we are om interest only, paying £440 per month.
after the 1st June the variable rate will be 2.44%above BBR, to give a current rate payable of 2,94%
Can anyone advise me what this will mean to the payments?

If you stay on interest only, your monthly payments will fall to £235.20.

As mentioned above, you should probably take this opportunity to overpay your mortgage, by keeping on paying the £440/month.

getmore4less

shopaholic2 wrote: »

My parents have a saviungs account that will pay off the mortgage for us but wont be accessible for about 15 years,i guess they have an endowment in place for us, it was a wedding present.

Find out what is really in place if they are funding an endowment what hapens if htey can't pay into it, also check it dfinatley yours and can't be taken to say payfor care or potential bankruptsy.

Just to add, my credit rate is very low,and so we won't be looking for a remortgage as we won't get one!

Sounds like you need to totaly review your finances,

Does the bank of Mum&dad deal also cover the secured loan?

What rate is the secured loan? is it also interest only?

Was the secued loan consolidation of other debts?

Do you have any other debts

shopaholic2

getmore4less wrote: »

Sounds like you need to totaly review your finances,

Does the bank of Mum&dad deal also cover the secured loan?

What rate is the secured loan? is it also interest only?

Was the secued loan consolidation of other debts?

Do you have any other debts

Mum and dad own their home outright, and so no fears of bancruptcy etc, they have ALWAYS been very good with money, and some of the money they are saving is mine from a previous house sale, i simply let them look after it as i am very bad with money.
The secured loan is £198 per month NOT interest only so that is reducing.
The sec loan was to consolidate other debts yes, and while i'm happy to be open and upfront,i only wanetd to have an idea what the repayments would refer to!!

But thanks for your help and input.

shopaholic2

poppy10 wrote: »

If you stay on interest only, your monthly payments will fall to £235.20.

As mentioned above, you should probably take this opportunity to overpay your mortgage, by keeping on paying the £440/month.

Hi Poppy10,
Thanks for that...
so the paymnets will actually be less???
Thats good news, altho we will probably stick with the higher payments as advised.

If the bank of England put rates up, would you know how far they are likely to go and what the worst our payments would be??
(I know no-one knows whats in the future, but is there a cap on interest rates etc???))

Thanks for your help.

poppy10_2

shopaholic2 wrote: »

If the bank of England put rates up, would you know how far they are likely to go and what the worst our payments would be??
(I know no-one knows whats in the future, but is there a cap on interest rates etc???))

There's no cap on interest rates. In the last housing crash in the late 80s, then Bank of England raised rates to 15% - that would make your monthly interest payments £1,200. While that might be extreme, it's sensible to budget for an interest rate of 7-8% (£560-£640/month)