end of 2 yr fixed term - what next?

repoman123

Hi everyone,

So my wife and I bought got a mortgage and bought our first home (as first time buyers) almost 2 years ago. We are joint owners on the house.

Initially when we got the mortgage, the deal was on a 2 year fixed term basis. I would like to know what happens after the 2 years is over? I believe this date is approaching in June and I'm just wondering what actually happens after that date? How do I calculate what my mortgage payments are going to be? Do I need to make sure a new deal is in place before that date?

As you can tell I'm not really in the know with this and rather than asking someone in a bank/building society, or an estate agent where they're going to send me to their broker - I thought I would ask here to try and get some truly unbiased advice.

Many thanks in advance

shortchanged_2

You will revert to your current lenders standard variable rate (SVR).

This is very likely to be a higher rate than you are on with your current deal.

Can you locate your mortgage paperwork? Because that should tell you how much you will be paying on the SVR if that rate hasn't changed since you took the mortgage out.

Bear in mind though that even though the SVR might not be a bad rate at the moment your lender is likely to be able to put this rate up whenever they feel like, even if the Bank of England base rate doesn't change.

So essentially you don't have to do anything or you could start looking around for a better deal.

repoman123

Thanks for the swift response. I'm with Accord Mortgages who I think are a part of Yorkshire building society.

I'll go and dig up my paper work and try and find out what the SVR is tonight when I get home.

Realistically, what are the chances of the lender changing the SVR frequently enough for me to be worried? If they want to change this, do they have to give me notice?

Again, many thanks.

kingstreet

It's 5.99%.

You'll want to ask them about "customer retention products" you could choose when the fix ends, or you may wish to consider a remortgage to a new lender.

repoman123

You're right, I called them last night on my way home from work and I'll end up paying roughly £100 more a month.

When I get more time I will ask them about their customer retention products. Additionally I'll begin looking around to remortgage.

Should I expect to pay any fees for remortgaging?

Thanks again

Jimbo1976

There are a variety of different fee options. Most lenders will have some sort of "fees free" remortgage package where you don't have to pay for the survey or the basic remortgage conveyancing. Sometimes you will need to pay a product fee, sometimes you won't. You need to do a bit of maths as typically rates with lower fees tend to be more than rates with higher fees (there is no such thing as a free lunch).

Speaking very generically, the larger the mortgage you have the better off you are paying a larger fee to get a lower rate (as the interest rate saving more than offsets the cost of the fee). If you have a smaller mortgage it is better to go for a low fee (or even a no fee option)

If the thought of doing all this comparison is too much, go and speak to a mortgage broker as they do all of this for you.

repoman123

That's really helpful. Thank you.

I don't mind doing all the maths, I just want to make sure I'm doing it correct. What you said makes sense so I'm gonna give it a go on my own before I go to a broker.

I need to first work out what is remaining on my mortgage once this existing 2 year deal ends. Any idea what the best way is of finding this out? I currently pay both the mortgage and the interest (I forgot what the industry term for this is).

dimbo61

Why Accord for your mortgage 2 years ago ?
Poor credit score ?
LTV now ?
Could you get a mortgage with a main stream / high street lender as 5.99% SVR is not cheap.

repoman123

2 years ago when we purchased the house I used a broker. I went and saw about 5 different brokers and settled with one guy who was whole of market but charged a fee of £249.

Out of all of the products he had, the best deal was with accord mortgages. Is there any reason why I shouldn't have gone with them?

My wife and I have a normal credit score (if there is such a thing). Both just regular graduates who are now working etc etc. Only debt we have is our student loan, and now our mortgage. Never missed payments or any of that sort of thing.

I think even now we wouldn't necessarily struggle getting a remortgage but I'm not an expert at these things so I just wanted to make sure that nobody was pulling the wool over my eyes and taking more money from me than necessary.

I get that 5.99% SVR is rubbish so I will most definitely be getting a remortgage. My current fixed rate deal was between 4%-4.5% (don't remember exact percentage).

StuC75

This site has been suggsted by others as a good way of working out what is left to pay after a number of years..

http://www.calculator.net/mortgage-calculator-uk.html

Plug in amount borrowed, term & rate and it provides the amortisation table to confirm - check this to your annual mortgage statement to show what is being repaid each year (though that may not be in sync with when mortgage was taken out).

The next important point is what the property may be valued at now, as that Loan to value ration may affect what you can get elsewhere..

The hope is that you didnt massively overpay as you may run the risk of being in low \ negative equity and stuck with current lender..or find that you would have to pay down a lump to move elsewhere..

repoman123

That website looks great, I'll certainly have a mess around with it soon and see if I can figure out how much of the mortgage has been paid off.

I'm pretty sure we're not going to be in negative equity. In all honesty there hasn't been much movement with house prices in my area since we purchased the house and even when we did, the seller was unfortunately going through a divorce so I managed to get a good price on the property.

We bought for £125,000 and gave a £18,250 deposit. Been paying £513 on a monthly basis since June 2011 on a 2 year fixed rate deal. I think the rate was about 4.2%. I'm pretty sure the house today is worth at least 130,000 minimum.

I don't suppose from that information anyone here can tell what my remaining mortgage will be? Or through some miracle be able to roughly tell me where I can find a good deal for a remortgage?

I think we'll probably go for another fixed term deal as paying the same amount each month really helps us when budgeting etc.

As always, many thanks!