Fixed rate mortgage changing to SVR during term

edwardtwibble

Hi,

I'm a first time buyer and poster looking for some help.

I acquired a mortgage offer from Accord in March, 2 year fixed at 2.84% which is valid until September. I assumed this would mean I'd pay 24 payments at 2.84 before moving onto the SVR at 5.99 when I would then remortgage regardless of when our sale actually went through. However I have been told that the "product" expires in February 2015. This effectively means that if my purchase takes until September to complete I will have up to 6 months of my 2 year fixed term at the SVR rate of 5.99 or whatever it is at that time.

Does this sound right? I have called their customer services and it seems my understanding is correct. Surely this isn't how it works as it seems crazy.

Thanks,

E

Jimbo1976

Some lenders eg Nationwide tend to give 24 months for a 2-year fixed rate once it completes.

However most including Accord have a defined end date for their rates.

If you look on your original KFI (mortgage quote) and your offer letter it will have the precise end date of your rate.

Once your rate finishes you are free to ask Accord for another rate or look to remortgage. Though if you are sensible you will do this 2-3 months in advance. If you don't do anything you will move onto the SVR. So by the time you complete (eg September) you will have a 18 months fixed rate

edwardtwibble

Oh! Ok, so when I get to Feb '15, I won't have to stick around on the SVR but will be free to remortgage. That sounds much better. So I won't be tied in for 2 years from completion, only until the rate expires.

Jimbo1976

Yes. Your early repayment charges should finish when your fixed rate expires. Check your KFI/Offer to confirm

kingstreet

You may be able to remortgage after the penalty period expires and you go onto the "follow-on" rate. This will be subject to status, criteria and loan to value at the time.

A change of circumstances in the next two years could see you stuck on that lousy standard variable rate.

Did you consider options with lower follow-on rates?

I haven't used Accord lately, as I'm concerned about my clients getting stuck when another lender might have slightly worse initial rate, but much better "follow-on."