Mortgage Interest rate doubles

1gabriella

We have just been told by our mortgage company,Santander, that in a couple of months they are doubling our mortgage rate from 2.74 to 4.9, this means our payments go from £680 which is a struggle at the moment for us but we are just about able to meet, to £1287. We have called Santander and they are not prepared to do anything to help.

Due to the financial difficulties we have (my husband is self employed and business isn't great) our credit rating is pretty much shot so we don't think negotiating a new deal with another supplier is an option, or can we?

HELP!!!

Anybody got any suggestions?

purcel

From what you have said i assume you are on a fixed rate at the moment, going towards the end of your fixed in 2 months time and onto the SVR( which you should've known and expected). You can either remortgage with your current mortgage provider or another one, don't think there are any other options really!

kingstreet

Ask them if they have any customer retention products for you. If your payments have always been up to date they should have something, although it may not be significantly better than SVR and tie you in for another period of time.

Otherwise, you're going to have to go the "payment difficulties" route and see if they will offer you a temporary change to interest-only to reduce your payments.

Horseunderwater

1gabriella wrote: »

We have just been told by our mortgage company,Santander, that in a couple of months they are doubling our mortgage rate from 2.74 to 4.9, this means our payments go from £680 which is a struggle at the moment for us but we are just about able to meet, to £1287. We have called Santander and they are not prepared to do anything to help.

Due to the financial difficulties we have (my husband is self employed and business isn't great) our credit rating is pretty much shot so we don't think negotiating a new deal with another supplier is an option, or can we?

HELP!!!

Anybody got any suggestions?

You have 2 options on this one renegotiate a new fixed rate deal - there was one in April that I signed up to for a rate of 2.69% which was a fix for 2 years or try and see if there is another lender who will take you on. Have you paid every mortgage payment on time? If so you should be in a strong position to get the former option.
http://www.santander.co.uk/csgs/Satellite?appID=abbey.internet.Abbeycom&canal=CABBEYCOM&cid=1237875649724&empr=Abbeycom&leng=en_GB&pagename=Abbeycom/Page/WC_ACOM_TemplateW2

starbarboy

Hi there

Sorry to hear you predicament.

In the event you are not able to negotiate a better rate (and perhaps even if you do!) I would recommend contacting the Citizens Advice Bureau (other free advice services are also available) who will help you prioritise your debts and hopefully negotiate with your creditors on your behalf. It will hopefully take some of the pressure off of you and help clarify your options - not just with your mortgage but with any unsecured debt as well.

Good luck and hope you manage to sort something out.

Stephen

gazter

This is a real warning to people. Are all banks/building societies like this? The building society I'm recently waiting a decision said that they offer existing customers a series of deals as they come off fixed rates. The svr would be a nightmare, by the time I come off a fixed rate ill have a 55% LTV. I don't fancy paying 4.5%

Brock_and_Roll

People need to remember that base & mortgage rates are at historically low levels. A mortgage is usually a very long term committment and at some point interest rates will revert to, or rise above their long term average.

By any historical standard a rate of 4.5% is still very low indeed and 2.69% is positively loss-making for Santander given what they pay for their money. My advice as a tired old fashioned banker to anyone taking out a mortgage would be to double check that they could just about scrape the payments together if rates were 8-10% for a while.


To be honest people taking out mortgages in recent years have been lured into thinking that this ultra cheap money will carry on for ever - and the govenrments new schemes are only going to make this worse and store up problems for the future.

gazter

Brock_and_Roll wrote: »

People need to remember that base & mortgage rates are at historically low levels. A mortgage is usually a very long term committment and at some point interest rates will revert to, or rise above their long term average.

By any historical standard a rate of 4.5% is still very low indeed and 2.69% is positively loss-making for Santander given what they pay for their money. My advice as a tired old fashioned banker to anyone taking out a mortgage would be to double check that they could just about scrape the payments together if rates were 8-10% for a while.


To be honest people taking out mortgages in recent years have been lured into thinking that this ultra cheap money will carry on for ever - and the govenrments new schemes are only going to make this worse and store up problems for the future.

Thanks. I like this bbc page, nice simple and great for quick calculation of mortgage at different rates:
http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

At 2.89% (which the BS is offering for 4 1/2 years fixed) my monthlies are £720.89, at 10% that jumps to an eye watering £1400 per month.

I could cope with it, but life would be come very grim and hits about 55% of our net take home. At 6%, it is probably what we would be making as over payments, about £1,000 we can cope without and noticeable difficulties.

I do try to be good with my finances, and intend on taking these four and half years as an opportunity to overpay to put us in a position to be not so bad if rates got bad in five years time.

witchy1066

I read this post with interest and sympathy for anyone in that position, its a warning to everyone applying for a mortgage, while its great to look around and get the best bargains available to you its also worth bearing in mind what your mortgage could be if your rates went higher, and make allowances accordingly

the first and only mortgage I have ever had was 40 years ago, it was 12% and we thought this was good, the average at the time was 15% , ok I know that was 40 years ago and bears no relevance to the housing and mortgage market today but as others have said, at the moment rates are at an all time low and will go up in the future,
please make allowances for this when taking out a mortgage

J
xxx