Trying to extend the term of our mortgage

40andproud

Hi,
I'm looking for some advice please. We have our mortgage with HSBC and would like to extend the term (currently 12 years to go, would be paid off by the time we are 60). However, they are saying that they will not let us stay on the same rate if we do this because they consider it a new mortgage application. The problem is that our rate is 1.5% and I don't think we'd be able to get that anywhere else.

When we took out the mortgage, my husband's business was doing really well and I wasn't working. Now I work full-time and my husband's business is still doing OK but if we had to apply for a new mortgage, his accounts might not work so much in our favour. What we want is a bit more cash in our pockets each month, rather than putting it all into the mortgage. Is there any hope of this or will we just have to put up with it? All advice gratefully received.

Joe_Bloggs

It is difficult to suggest anything without The value of the house and the size of the mortgage, term of the mortgage. It does sound like you have a fantastic mortgage deal already that many would be grateful to have.

Perhaps you should do a statement of affairs exercise to see where the money is going and what you can do without do differently, get better value etc .

J_B.

40andproud

Thanks for this reply. The house value is approx £400 - £450k, remaining mortgage is about £159k. The term is 12 years, as mentioned.

We have already done a budget plan but a lot of our outgoings are things we can't change and we also have 2 children As you say, it is a great deal and perhaps there is no other way around it but no harm in asking, I hope.

Joe_Bloggs

Loan to value at worst is 40%
So at present 169K @ 1.5% over 12 years is 1283.13 a month.
In the ideal world you could get:-
169K @ 1.5% over 17 years for 939.06 a month. releasing 344 a month.
However you may only get 3%,4%, 5%

3% 1058.57 releasing 224.56 per month
4% 1143.10 releasing 140.03 per month
5% 1231.43 releasing 51.7 per month

J_B.

Thrugelmir

40andproud wrote: »

Thanks for this reply. The house value is approx £400 - £450k, remaining mortgage is about £159k. The term is 12 years, as mentioned.

Consider downsizing your property. If you don't wish to change your lifestyle. One day interest rates may rise. Then you will be forced to make savings.

40andproud

Thank you both for these replies.

It's obviously not worth remortgaging to a deal with a higher interest rate. HSBC have been very confused about whether we could keep our rate or not, only confirming in the last few days that it is 'against policy' to do so :mad: They regard our request for a remortgage as a new application so that's that as far as they're concerned.

We have also considered downsizing (great minds) but it would cost about £20,000 to move and we felt we should aim to be mortgage-free if we do that. So we'd be looking at houses for £250k approx and there aren't too many of those in this area that we'd be happy to move to. This makes us sound fussy but we're trying not to be and to keep an open mind. It really helps that your advice is tying in with what we have been thinking. Thanks again and any other thoughts?

Thrugelmir

40andproud wrote: »

They regard our request for a remortgage as a new application so that's that as far as they're concerned.

Which it is.

Why should the bank give its profits? The sooner you repay the capital debt owed the sooner that the bank can relend the money out at a higher rate of interest.

At a mortgage interest rate of 1.5%. You have the ability to earn more on your savings than you are paying on your debt. So if you really wanted to. I'm sure that savings could be found in your budget.

Sometimes takes a light bulb moment to decide what's important in life. Pay a visit to the Debt Free Wannabe board. A great place for inspiration and support if tackling your mortgage debt is a real objective.

marathonic

I agree with the previous posters, if you have a 1.5% rate and there's ANY way possible to stick with it, that's what you need to do.

As per the above post, adding 5 years to your term will move the interest rate to around 3% and release £224.56 per month,

If another potential option was for one of you to work an extra 40 hours per month at some low-paid job, keep the 1.5% and pay the mortgage off 5 years quicker, I know which option I'd choose.

This is assuming you can't cut back on your current expenses - Sky, mobile plans, eating out, etc.

Also, if looking at taking on some extra work, I wouldn't even look at it as being required for the full term of the mortgage - there's a good chance that your current earnings will improve over the next couple of years.

40andproud

OK, thanks for your thoughts.

Simon_gloster

40andproud wrote: »

Hi,
I'm looking for some advice please. We have our mortgage with HSBC and would like to extend the term (currently 12 years to go, would be paid off by the time we are 60). However, they are saying that they will not let us stay on the same rate if we do this because they consider it a new mortgage application. The problem is that our rate is 1.5% and I don't think we'd be able to get that anywhere else.
When we took out the mortgage, my husband's business was doing really well and I wasn't working. Now I work full-time and my husband's business is still doing OK but if we had to apply for a new mortgage, his accounts might not work so much in our favour. What we want is a bit more cash in our pockets each month, rather than putting it all into the mortgage. Is there any hope of this or will we just have to put up with it? All advice gratefully received.

Am I missing something here!!!!?

They want to re-write the mortgahe JUST to change the term?

A term adjustment is a back office administritive task.

If HSBC did that for all requests like that they would be snowed under on internal full application adjustments.
If I really am wrong and they do this......they need to have a word with themselves.

Great rates apparently but an@l procedures.

marathonic

Simon_gloster wrote: »

Great rates apparently but an@l procedures.

If they wanted efficiency, then yes, they could just change the term of the mortgage quite easily.

However, the fact of the matter is that they have a lot of people on good rates that they would love to get rid of - the 1.5% rate the OP has would be one of them.

Therefore, the banks make you re-write the mortgage so that they can get out of the rate.... and would you blame them - if you ran a business, you'd do the same.

Some people will stick with the rate when they know the implications. Others will, due to personal circumstances, be forced to move and, thus, reduce the amount of money lent out by the bank at old rates and increase their capacity to lend at the new, higher rates.