[Q] After 1st Mortgage deal expires

thecrater

I got a 3-year tracker mortgage two years ago which is due to end in September next year. When it does the rate will go up from 2.5% to the lender's SVR which is over 4.5%

I would like to know what are my options? Am I able to "move" my mortgage to another lender? or am I stuck with the lender's SVR for the rest of the mortgage?

I was under the impression that it would be possible for another lender to take over the mortgage in a similar way to moving ISPs or telephone companies and provide me with another deal. I truly hope I'm not on a different planet with this thinking.

I had done a bit of homework before I got the mortgage taking into consideration things like early repayment, overpayment etc but at the time I was more concerned with getting a first mortgage rather than what happens afterwards. Also, there was no chance of me finding a treasure-trove that I could use to pay off the mortgage so I didn't pay much attention. However, a friend told me that early repayment could be applicable if you chose to move to another lender even after the deal expires. I was under the impression that all the terms were only applicable during the 3-year deal period.

Any help and advice would be greatly appreciated.

BoracicLint

Have you managed to build up some equity in the property, either by capital repayment or increase in value? If so, you can shop around for a remortgage deal with another lender, the quality of the deal will depend on your loan to value.

If you are in the unfortunate position of negative equity then I am afraid you will likely be stuck on their standard rate.

thecrater

Hi. Thank you for your reply. The property is worth over 150K and the mortgage size around 107K down from 114K. It's a repayment mortgage. I live in London so it's very unlikely to be in negative equity.

latecomer

All you have to do is check the available mortgages for your loan to value ratio (107/150)= 67% .

You probably should have some advice given that you probably have no idea what kind of mortgage you want. A lot of people are going for 5 year fixed rates as they are currently at very good rates and most people expect interest rates to rise eventually.

Have a look here and you'll get some idea of whats available:

http://www.money.co.uk/mortgages.htm

kingstreet

Once your current rate ends, you should be able to remortgage to a new lender, penalty free. Early repayment penalties nowadays tend to last only as long as the rate. "Overhangs" as they are known rarely appear in mortgage products today.

You may have a final fee, or deeds release fee to pay if it wasn't charged upfront. You need to look at your mortgage offer, or section 8 of your key facts illustration to establish this.

Remortgage products often provide a free valuation and free legals. You may still have an arrangement fee to pay, which the lender will kindly add to the loan. Interest is then payable on this for the whole length of the mortgage, or until you get around to paying it off.

Finally, don't forget the mortgage term. If you took out the current one for 25 years and 5 have gone, make sure you go for a 20 year term for the new one, otherwise you'll never get round to paying it back. If you are the kind of borrower who has the discipline to make regular overpayments, you can take a longer term to keep the contractual monthly payments lower, knowing the extra years will be erased by the overpayments you'll make.

thecrater

Thank you all for your kind help. I will take your advice on board and see how it goes. Once again, thank you.