End of fixed term mortgage

dimbo61

With the coop offering a 5 year fix at 2.79% who knows what will happen in the next 12 months when the government funds filter through.
I like the long term security of a 5 year fix and rates have never been this low.
I drive a big yellow van ( with blue lights for the last 26 years) and my pension has changed greatly.
I can not retire ( take my NHS pension) at 50 as the earliest retirement age is now 55.
I have like you less than 10 years to normal retirement at 60 so THINK! I am safe ( but who knows)
We have worked hard to pay down our mortgage quickly and save thousands of pounds in interest payments.
I have two sons at uni today and we help where we can.
taking a longer term and the cheapest short term deal will cost you more in interest and mean you would need to work full time into your 60,s and even 70,s

janet_oggy

Didn't know the co-op were doing one that cheap...will have to look into that one..

Yes, I am lucky with my pension in that I have less than 10 years to do...my colleagues with more than 10 to do have just been shafted, and have now been told that they have to work until they are 60, throwing their retirement plans into disarray.
I know one individual who, along with his wife too, have both now to work an extra 9 years each, paying 9 years more each in pension payments, and due to the way that this wonderful Government have just re-structured the pension plan, they both stand to lose £50,000 off their combined lump sums !!!!!!

Re your last sentence, I have been playing with the figures, and as said previously, can drop our payments to around £600 per month, which will leave a shortfall of about £25k in 6 years time, which I will then be looking to pay off from my lump sum.

janet_oggy

Just looked at the co-op 2.79% mortgage on here...

http://www.co-operativebank.co.uk/servlet/Satellite/1343802392607,CFSweb/Page/Bank-Mortgages#5yr

and there is a £999 booking fee, which we haven't got/aren't wanting to pay, so will be giving that one a miss !

kingstreet

kingstreet wrote: »

Consider paying a fee. On a five year fix, you may find you get your money back by the savings you make on a lower rate product. There are products with low/moderate fees with rates around the 3.1% mark, which will save you £200 a year interest on a £60k mortgage.

The funding for lending scheme means rates may well be lower the further into 2013 we go as lenders need to fulfill their lending promises/targets to avoid penalties.

Janet - you simply add any fee to the mortgage. You don't (often) have to pay it upfront. In the Co-Op case, it's £150 upfront, with the balance on completion. As I said in post #13, it may be sensible to pay a fee if you get payments which are low enough, for long enough, to cover the cost.

Don't just view the fee in isolation. There is no "no fee = good, fee = bad" scenario. There are rate and fee combinations where one will suit you more than the other.

janet_oggy

Thanks again KS.....now you've mentioned it, I believe we did this on our current mortgage, so probably still owe about £450 in set-up fees on that !!!

janet_oggy

Had another phone call this afternoon from the Santander, now stating that they are freezing their mortgage deals for the Christmas period, and won't be changing anything until January.
I think I will hang on until then and see what both they, and the Barnsley, have to offer !!

kingstreet

Your current offer doesn't end until March, so sit on your hands and see what happens. There are reasons why rates will be lower in 2013 and you may end up worse off by jumping too fast.

latecomer

Do you honestly believe that rates will get better than 2.79% for a 5 year fixed? I'd be interested to know why you think that.

That 5 year fixed is what we have applied for - its significantly better than our current 5.39% or the SVR from the Britannia BS which we would go onto.

kingstreet

Funding for lending.

It will put around £80 billion of additional money into the system for mortgage and SME lending in 2013. Lenders who sign up will have to meet increased lending targets or face financial penalties from the Government.

To lend more, lenders will have to increase lending at higher LTVs, or cut margin to lend at lower LTVs to compete with each other. FLS means lenders are now all on a level playing field, so the comparative advantage of HSBC to borrow at lower rates is removed and the likes of RBS ,LBG and building societies like Skipton and Coventry will be able to lend at significantly lower rates, as their funding costs have fallen.

Coventry/Godiva is in the middle of issuing a RMBS to free up another £1.4 billion it can use as security for further FLS funding.

http://www.moneymarketing.co.uk/mortgages/coventry-launches-14bn-rmbs-to-access-more-fls-funds/1063329.article

As we get through 2013, lenders approaching the "penalty date" will be desperate to get money off their hands and the only way to do that without increasing risk is to cut rates on lower LTV stuff.

kingstreet

More here;-

http://www.thisismoney.co.uk/money/news/article-2242219/Lenders-draw-4-4bn-Funding-Lending-lend-extra-500m.html

http://www.mortgagestrategy.co.uk/latest-news/fls-participants-increase-to-30/1060807.article

The penalty;-

Under the scheme, the Bank of England will lend UK Treasury bills to lenders for up to four years for a 0.25 per cent fee per year, increasing by 0.25 per cent for each 1 per cent fall in net lending to a maximum of 1.5 per cent.

So lenders are going to be anxious to avoid a 1.5% charge if their net lending falls, hence the need to compete with each other to keep market share up.