2 year fix coming to an end - and just had a pay cut!

Daisybaby1

My husband and I bought our first home together 2 years ago. We got a fixed mortgage and the last fixed payment is due mid July. At the time of getting the mortgage, my husband had been working for the same company, on the same bonus scheme, for 7 years, earning bonus every week without fail. A month ago he was told by his boss that the bonus scheme was changing. He gets paid weekly and his wages since then have been a lot less than we are used to. It's enough to pay the mortgage, all the bills and to eat, but with almost nothing left after. We have an overdraft, but don't go into it. We don't have any other loans or credit cards. We have an argos card but if/when we use it, it's always paid off when due. We have 2 children and I am a stay at home mum. Just thought I'd mention those things in case they're relevant!

We were planning on looking for a new fixed mortgage soon, but are now really worried we will be turned down. Any one have any ideas? Also, if we have to stay with our current lender, what happens when you go on to SVR? Do they just take whatever they want each month? How much does it usually, realistically vary by? Thank you if you have managed to read this far! I'm really hoping that I'm panicking for nothing . . .

ACG

Vital information:
how much is his income?
Do you get an tax credits?
How much is the mortgage?

In short, you MAY be able to switch to a new deal, it will be dependent on the lender.
If not you will sit on their standard rate, they cant charge what they want and it will usually rise (or fall) in line with the bank of england base rate.

Daisybaby1

Thank you for replying.

His income has always been around £37000 (before tax) and we are not entitled to tax credits on that wage. We have worked out that if his wages carry on as they are, which is very likely, his income will be around £30000 (before tax). We would be entitled to a small amount of tax credits (I believe around £20 a week) but have not put in a claim for this as yet.

Our house was £168500. We put down a deposit of £17500. We borrowed £151000 and I believe the balance now stands at around £149000. We have been paying £840 per month. The house was a wreck when we moved in, we done lots of work to it and recently had it valued at £180000, we were hoping switching would allow a better LTV rate

ACG

I think you may struggle to remortgage elsewhere. Its a case of seeing if your current lender has any retention deals you are eligible for.

Daisybaby1

Thank you (I think, haha!) Tummy is in knots

amnblog

Your current lender will most likely offer you another fixed rate without too much fuss. It may even be lower than your current rate.

Give them a call, ask about rate switch options when your current rate ends.

Daisybaby1

Thank you amnblog, I will definitely do that. Do you think it's worth at least trying with a different lender, or will that hit our credit scores etc and not be worth it?

Thrugelmir

Suggest you go through your outgoings with a tooth comb. As that's a sizable debt to service on the lower income combined with a family to support.

Personally I would try and obtain the longest fix term product I could. At least then outgoings will be known, and will offer protection against the envitable correction that's to come with interest rates.

Bufger

I'd also go for the lowest fix term product I could. If you've done that much work to your house and its valued as such then you will be able to get a better product so the question here is affordability.

I'm guessing it was a joint application 2 years ago and you were both earning? based on 37k you would have been at your limit of lending when you originally took the product.

If say you went for a product now and had to produce the last 3 payslips what would they reflect? If you get my meaning :-)

SVR isnt so bad but you do need to check your affordability for when rates rise. They have been due to rise for a while now and new mortgages are based on affordability at 6/7% and not the current rates. You may need a lifestyle change or to look for a second income but there are plenty of ideas around here.

Dont worry though, there are always people surviving on far less by being more frugal. It is possible :-)

Daisybaby1

Thanks for replying bufger. We have done lots of shopping around and found that we could get a fix for 2 years paying about £750 a month, which to us is affordable (especially after paying £840 for the last 2 years!) but it's up to the lender whether they deem it as affordable, which is the worry now.

It was a joint application, but only on my husbands income, I wasn't earning then. I see what you mean about applying asap as if he got monthly payslips it wouldn't 'show up' yet, but because he gets paid/payslips weekly the drop in income is already very apparent. He has spoken to his boss and has put his name down to do overtime every saturday for the next 6 weeks, hopefully that will keep the weekly income at a level we are used to, and at a level that would satisfy a lender. It would just be a case of explaining the 2 weeks pay where there were no bonus payments. . . ?

To be honest, it's not the day to day living I'm worried about as such - I'm pretty good at getting the most possible for our money! It's really just the mortgage, I like to know how much money is going to come out of the bank each month. With SVR do you even get notified about rate rises or do they literally just take however much they like each month?

[Deleted User]

If you like to know how much is going to come out of the bank every month, then look at longer fixes than 2 years.