Current mortgage rate? Mortgage plans, is there a charge for changing? Advice needed

blue_monkey_2

Hi, I am a complete newbie to this so apologies is the questions are dumb - it is not something I have had to do or pay any attention to but need to help my mum sort herself out.

I was wondering what the current mortgage rate was - do the banks have a different rate than that of the Bank of England. I posted some questions last week but never got an answer but need to get sorted out so know what we are doing in the future.

Mums mortgage is a on a low variable 2 year rate with Abbey and this has come to an end and she will go onto Base rate which I understand is going be a much higher rate (around 7% unless it changed) unless she goes to the bank and changes her plan. Abbey have a Flexible lifetime mortgage that she can switch to but I understand that switching plans means there will be a charge of around £700 for starting a new plan. As she pays off around £600 a year it seems silly to pay out over a years payments to take another plan so we was wondering if it might be better to get a loan secured on the house and pay off the mortgage in full so she just owes the loan. She has around £23k left to pay for either 12 or 14 years, I can't remember exactly off hand but she would get a lon for the same. The house is worth around 250k so I am sure getting the loan would be no trouble, she is 56 now but obviously has all this equity in the house.

I was thinking that a secured loan would be at a fixed rate and it might be better that she does this as the loan is for a fairly small amount to go on the propery but if someone else can advise further that would be much appreciated. I don't know anything about mortgages really but am trying to help her and learn at the same time.

Thanks

JoeK_3

blue_monkey wrote: »

Hi, I am a complete newbie to this so apologies is the questions are dumb - it is not something I have had to do or pay any attention to but need to help my mum sort herself out.

I was wondering what the current mortgage rate was - do the banks have a different rate than that of the Bank of England. I posted some questions last week but never got an answer but need to get sorted out so know what we are doing in the future.

Mums mortgage is a on a low variable 2 year rate with Abbey and this has come to an end and she will go onto Base rate which I understand is going be a much higher rate (around 7% unless it changed) unless she goes to the bank and changes her plan. Abbey have a Flexible lifetime mortgage that she can switch to but I understand that switching plans means there will be a charge of around £700 for starting a new plan. As she pays off around £600 a year it seems silly to pay out over a years payments to take another plan so we was wondering if it might be better to get a loan secured on the house and pay off the mortgage in full so she just owes the loan. She has around £23k left to pay for either 12 or 14 years, I can't remember exactly off hand but she would get a lon for the same. The house is worth around 250k so I am sure getting the loan would be no trouble, she is 56 now but obviously has all this equity in the house.

I was thinking that a secured loan would be at a fixed rate and it might be better that she does this as the loan is for a fairly small amount to go on the propery but if someone else can advise further that would be much appreciated. I don't know anything about mortgages really but am trying to help her and learn at the same time.

Thanks

Blue_Monkey, a switch to a secured loan is likely to be at a higher interest rate than your proposed standard variable rate with ABBEY.

The size of the mortgage is so small that it is extremely sensitive to fees. You need to consider remortgaging to another lender and one that does NOT charge fees for the remortgage. The problem is that most lenders will not touch any loans less than £25,001 but you may want to have at look at the Woolwich website at http://www.woolwich.co.uk and select a mortgage product that may be suitable for your mum.

JoeK

blue_monkey_2

Thank you JoeK,

Before the last 2 year plan we found out mum has been on a rate of nearly 7%. She was just going to increase the mortgage but my dad was still on the deeds - after divorce he was supposed to get taken off but mum never had the money and my dad kept this very quiet so that if anything happened to mum he could get the house back. anyway he called me all sorts when he found out mum was getting his name taken off and it was me who had taken her to the bank and he messed us around for 5 months - but he is off now and the house is in mums name and this is why she is on this special 2 year rate which is coming to an end now. I was not aware there would be a fee to changing to another rate until I started reading bits and pieces. It is all so complicated when you ae a complete novice. Anyway, I thought there were secured loans of around 5% so this is why I thought this might be a better option for her rather than changing plans every few years. I will have a look at the site you have suggested, what concerns me is that the lady mum does her 'main' job (she has a couple of part time jobs) for does not give her payslips as it is under the Tax and NI amount - she has worked there for about 14 years and it has always been like this. She has another job that she pay Tax & NI on as it is local authority but we pay all her mortgage and insurances for her so she has this income as well. The Abbey were quite happy for her to sit there and say she did not have this on 'paper' (apart from the one pay slip that earns her a small amount of money really) but someone else won't. She has always been with the Abbey and is reluctant to change banks - like older people are, heck she even pays double for her milk as she won't use the new milkman as she knows the'old one' *sigh* - but was trying to work out what the next step was that would be better for her. Over £25k would not be a problem - she has not had a holiday for years so maybe that would be an option with the extra money but the gutters need doing as well so we will see - I am just reuctant to start gettong more money on the house when there is no need to. I was also worried that if the interest rate kept on rising thatit would push her payments higher. There is so much to take on board isn't there.

Thanks for the advice, I will have a look at the site you have suggested and sit down with her later on this week.