Crown jewel mortgage?

marsman802

Due to the crazy market in London I've sailed over the 40% equity mark in the last year.

I originally took a 4-yr fixed (right move at time) which is up in 1 yr.

Is there a holy grail mortgage out there? I was browsing and HSBC do a lifetime tracker at 1.49% above base rate with a £999 booking fee and valuation fee. It's portable and no initial term.
This seems like a really straightforward deal to avoid changing mortgages every few yrs and paying silly booking fees which must absolutely load up mortgages for everyone.

Is that the thing to aim for (a low base rate lifetime tracker)?

pjread

I'm looking at something similar. I always intended to stick with fixes but suddenly a few new trackers are creeping out that look potentially attractive.

I suppose the question is, if the base rate rose 5% would you be getting repo'd or could you handle it? A fix is effectively an insurance policy against that. personally my mind is beginning to say "get a tracker and cut the mortgage down with extra overpayments while the base rate is low", hopefully this will still be the case in 6 months but the base rate does sound likely to start increasing. Only question is when and how quickly.

marsman802

pjread wrote: »

I'm looking at something similar. I always intended to stick with fixes but suddenly a few new trackers are creeping out that look potentially attractive.

I suppose the question is, if the base rate rose 5% would you be getting repo'd or could you handle it? A fix is effectively an insurance policy against that. personally my mind is beginning to say "get a tracker and cut the mortgage down with extra overpayments while the base rate is low", hopefully this will still be the case in 6 months but the base rate does sound likely to start increasing. Only question is when and how quickly.

Yes we can absolutely cope - we took a very conversative mortgage in the first place which I'm delighted about now. Didn't overstretch ourselves.

I really want to know if a base plus 1.49% tracker was around before the crash or whether its worth jumping on it.

Horseunderwater

Not sure if they were around at that low rate, but lifetrackers were available. I'd stick with fixed rate for now.

marsman802

Horseunderwater wrote: »

Not sure if they were around at that low rate, but lifetrackers were available. I'd stick with fixed rate for now.

Thanks - that's useful to know.

One concern we do have is that my wife is due to go on maternity leave later this year however she will only be on statutory mat pay and intends to take a year off.
The mortgage would be roughly 5-6 times my own salary and therefore I'm concerned we'd get kicked back from getting a lifetime tracker at that stage. Affordability wise, and the lender would view it as a risk, I couldn't easily keep pace with mortgage and bill payments.
However, and this is crucial I guess, my wife does intend to go back to work. But only part-time if her work will allow.

So my motivation for moving now is to pay the ERC but lock the rate and prevent any tricky affordability checks further down the line during her maternity leave.

Base +1.49% just seems really tasty to secure.

Any opinions very much welcomed.

AndyT678

I was looking at the exact same HSBC mortgage. It's tempting and I think you can cut the booking fee down by opening a bank account with them too.

In the end I decided that I prefered to avoid the risk and went for a 5 year fix at 2.99%.

scottishblondie

That is the mortgage I currently have. I switched from my previous tracker with them at BOE + 1.99%, and only paid a £99 fee by virtue of opening an HSBC current account. By the looks of it that isn't available any more.

For me it's ideal as the payments are comparatively low at the moment and I am able to overpay every month. The £99 fee paid for itself after the 1st month. My aim is to overpay as much as possible just now to guard against future interest rate rises.

However, for a £999 fee plus an ERC? That seems like a large initial outlay and I would be thinking about it very carefully.

marsman802

scottishblondie wrote: »

That is the mortgage I currently have. I switched from my previous tracker with them at BOE + 1.99%, and only paid a £99 fee by virtue of opening an HSBC current account. By the looks of it that isn't available any more.

For me it's ideal as the payments are comparatively low at the moment and I am able to overpay every month. The £99 fee paid for itself after the 1st month. My aim is to overpay as much as possible just now to guard against future interest rate rises.

However, for a £999 fee plus an ERC? That seems like a large initial outlay and I would be thinking about it very carefully.

Yes it would be lumping £9k onto the mortgage. I need to do some digging to see if we would be able to remortgage whilst the wife is on maternity leave next year (she's the chief breadwinner here!) as this is the key reason for acting now.
To lock in £227k @ 1.49%+BBR seems like a good move but if I'm able to remortage my 4yr-fixed next year with no ERC then I'm definitely waiting.

Thrugelmir

Anything under 2% above base will probably be considered a good rate in the years to come.

marsman802

Thrugelmir wrote: »

Anything under 2% above base will probably be considered a good rate in the years to come.

Difficult one to call really, isn't it. I guess the rule is I shouldn't be "rate-chasing".

I like the way the HSBC deal works in that I can lock in the bulk of the £227k at 1.49%+BBR and if I need to top up down the line for further house purchases then the top up amount is at the latest rate at that time.

I've worked out that despite having to pay £9k in ERP and booking fees onto the new loan I will end up paying £4k on my current mortgage rate (difference between HSBC rate and my current rate (3.99%) and then the difference between HSBC rate and my SVR rate (4.24%) which kicks in next June) if we're not allowed to remortgage next yr with my wife on mat leave - leaving £5k. If the BBR moves I would think it likely that Santander move my SVR so I'm working on that assumption.

So really the bit I want to work out is whether the £5k cost difference is worth it to lock the whole thing down and I'm beginning to think it really is.

amnblog

marsman802 wrote: »

Thanks - that's useful to know.

One concern we do have is that my wife is due to go on maternity leave later this year however she will only be on statutory mat pay and intends to take a year off.
The mortgage would be roughly 5-6 times my own salary and therefore I'm concerned we'd get kicked back from getting a lifetime tracker at that stage. Affordability wise, and the lender would view it as a risk, I couldn't easily keep pace with mortgage and bill payments.
However, and this is crucial I guess, my wife does intend to go back to work. But only part-time if her work will allow.

So my motivation for moving now is to pay the ERC but lock the rate and prevent any tricky affordability checks further down the line during her maternity leave.

Base +1.49% just seems really tasty to secure.

Any opinions very much welcomed.

Does that not leave you exposed to rate rises when you are on a single income?

Don't assume your affordability will fit when your spouse returns to work either, as childcare costs are a major factor since the rules changed last month.

You would be smart to get some advice from a Broker.