Mortgage at end of fixed rate?

bill86

My grandmother is 71 years old and facing a problem with her current mortgage provider Halifax. In 2007, she moved her repayment mortgage to Halifax, for a term of 21 years, when she was 64 years old. She has been on a fixed interest rate for the last few years of 4.54%, and this is due to expire in July 2014. The balance of the mortgage is £173,000 with monthly repayments of £1,400 (this includes interest of about £680). The value of the property is approximately £850,000.

I have contacted Halifax on her behalf to find out about her options once the fixed rate expires. They have told me that she will be moved to their SVR of 3.997% in July, but because of her age she is not able to move onto another fixed rate mortgage. Instead, she will be stuck on their SVR for the remainder of the term, currently 14 years. Whilst in the short term her monthly payments will decrease, she is very concerned that when interest rates eventually rise, she will get into financial difficulty. We have found it impossible to find any other company to give her a mortgage at this stage in her life, and her self-employed status.

I can't understand why Halifax are happy for her to continue her mortgage on the SVR for the next 14 years, but will not allow her onto a fixed rate so she can have some certainty for the near future about her finances. Halifax have already agreed a mortgage term until she is 85 years old so they can't be exposed to any additional risk by moving her to a fixed rate, but they stand to profit once the base rate finally goes up.

Does anyone here know if Halifax are right when they say they can't change her mortgage product, despite her already being an existing customer?

ACG

The MMR rules were brought in in April.
Halifax seem to have interpreted them differently to everyone else.

Could your grnadmother not overpay (to the tune of what she was previously), this is turn would reduce the term and limit any potential risk as she would be on the SVR for a shorter period.

Tillytwopaws

I replied to another post about the way Halifax are approaching mortgages that are already extending beyond retirement but I can't remember which thread. Maybe one of the other members of the site could tell me if there's a quick way to find it?

As far as Halifax are concerned, overpayments will reduce the capital balance and any overpayments above £1000 will automatically reduce the term.

Tillytwopaws

This is the reply I mentioned. Hope it helps.

OP - Halifax policies have been changing. Originally a PT review could not be done if both parties to the mortgage weren't present, however that was soon relaxed! The policy if you already have an interest only mortgage without a repayment vehicle has changed too.

It's correct that a PT cannot be put in place while there are arrears on the account.

With regards to anticipated retirement age and state retirement age, we would check the customer's retirement plans whilst talking to them. If they plan to retire at say 50 years, we would ask for pension details that would allow them to do that. Otherwise we would use state retirement age, and if the customer has no plans to retire and is theoretically able to work beyond that age then we would refer to underwriters, especially if the term already extends into your retirement.

The SVR / HVR are currently 3.99% by the way.

It's not about trying to offload customers, we do want to help people go onto better deals however we are not always able to recommend a suitable product based on the customer's needs and circumstances.

There is the online product transfer option if all that's wanted is a new rate putting into place rather than term or repayment changes. This is an execution only service rather than the review which is on an advised basis.

bill86

ACG wrote: »

The MMR rules were brought in in April.
Halifax seem to have interpreted them differently to everyone else.

Could your grnadmother not overpay (to the tune of what she was previously), this is turn would reduce the term and limit any potential risk as she would be on the SVR for a shorter period.

Thanks for the replies so far.

Yes, she could overpay while the SVR is lower than the 4.54% she currently pays now, but realistically the SVR isn't going to stay as low as it is for very long, and in the near future she will be paying a higher interest rate. Whatever overpayments she makes during that time won't reduce the term by very much.

If the SVR goes up significantly above what she pays now, she will have trouble making her repayments, this is why I'm trying to get Halifax to move her onto a fixed rate for 4-5 years, something they would be fine to do if she wasn't over 70

densol_2

Sorry to here this. I come to the end if my fixed rate next month and Nationwide could not be easier - just picked a new product on line and got an instant offer and confirmed. No questions about finances whatsoever. There are guidances in place that suggest this is the correct approach for existing customers with no additional lending. Most companies are following this - save for the "Halifax" which apparently according to their advert " give you more " !!! .... Rubbish

Why not make a complaint pointing out the " transitional guidelines " that suggest a straight swap and ask them to be followed or hope that Halifax eventually see sense and fall in line with the many other companies in the next few months then swap then.

ACG

I came to the end of my deal in just under 3 months. It literally took me 2-3 minutes to log in and chose a new deal.

Realistically rates are not going to rocket up overnight, they are probably going to take a good 1-3 years to go back up to 4.54%. Doing the sums your right its not going to knock a lot off. But in 3 years maybe Halifax will change their process to be more inline with the rest of the market.

Yorkie1

Tillytwopaws wrote: »

I replied to another post about the way Halifax are approaching mortgages that are already extending beyond retirement but I can't remember which thread. Maybe one of the other members of the site could tell me if there's a quick way to find it?

As far as Halifax are concerned, overpayments will reduce the capital balance and any overpayments above £1000 will automatically reduce the term.

Tillytwopaws wrote: »

This is the reply I mentioned. Hope it helps.

TTP, could I just ask, do you work for Halifax? Lots of interesting detail there.