Interest rate increases..what, when and how will it affect me on a SVR ?

bobbysox1v

My SVR mortgage with C&G is recalculated on 1st Jan every year.

I have a couple of questions that I am sure you guys read all the time but as I cant search on my mobile, I hope you dont mind if I type them out again here.

1) if the rate jumps up before the end of 2014, am I right to assume that my mortgage will go up from 1/1/15 ? rather than straight up in the month that the rates increase ?

2) what happens if there are more increases in the rate after 1/1/15, will the amount I pay go up straight away, or not until 1/1/16 ?

3)at the moment I pay more than the MSE calculator says I should, by £39 a month. The calculator also says that if we have a 0.5% rise, my new monthly interest will be an extra £39pcm ! so does this mean that I may not see a rise at all as I am already "overpaying" by the same amount as the increase should be each month.

Hope these all make sense. I am resisting the urge to try and leap onto a fixed rate for now. I cant afford to throw money at the bank as it is... *grumble grumble*

HappyMJ

Depends on your mortgage terms and conditions. Rate increases tend to apply immediately following an increase of the bank of England base rate. Rate decreases take a month or two before being applied but it realy just depends on the bank. As it's a SVR mortgage they can apply rate increases and decreases at any time and the increases may not match the same increase of the BOE rate. When decreases in the BOE rate were happening not all banks passed the cut on in full. It's not linked to the BOE base rate. It's usually calculated daily and debited monthly from your mortgage account.

pinkteapot

bobbysox1v wrote: »

3)at the moment I pay more than the MSE calculator says I should, by £39 a month. The calculator also says that if we have a 0.5% rise, my new monthly interest will be an extra £39pcm ! so does this mean that I may not see a rise at all as I am already "overpaying" by the same amount as the increase should be each month.

You need to look into this. I pay what calculators say I should, almost to the penny. It sounds like your SVR may be 0.5% higher than you think it is.

Try this calculator for comparison:
http://www.theguardian.com/money/mortgage-calculator

Put in the size of the mortgage and term as they were when it started, then the SVR, and see what it says your repayments should be.

According this page:
https://www.cheltglos.co.uk/mortgages/Your-Account/Interest-Rate-Information
Their SVR is currently 2.50%.

If your repayment is higher than it should be according to this calculator too, I would call them and ask how your repayments have been calculated...

bobbysox1v

ah that may be why...I used the term LEFT on the mortgage when working out the repayment amount.... I dont actually know what we originally borrowed as we have added it to it a few times. Phooey.

thanks guys.

Hopefully the rate wont go up too quickly. Already struggling without any pay rises in the past 7 years... Hope the cat is ready to switch to the basics brands

pinkteapot

If the budget's tight can you look at switching to a fixed rate for the next few years?

kingstreet

Are you on SVR or are you on base + 2% tracker for term?

bobbysox1v

It says I am on the lenders variable rate 2.5%

kingstreet

Right.

So when the Bank Of England raises its rate, your lender will raise the rate it charges on your account. Normally by the same amount and normally from the following month.

It may only alter your actual payments once a year if it applies some form of annual scheme, but the interest being charged changes more or less immediately.

Speak to your lender and establish how your account is managed.

Bantex_2

kingstreet wrote: »

Right.

So when the Bank Of England raises its rate, your lender will raise the rate it charges on your account. Normally by the same amount and normally from the following month.

It may only alter your actual payments once a year if it applies some form of annual scheme, but the interest being charged changes more or less immediately.

Speak to your lender and establish how your account is managed.

OP appears to be on SVR not a tracker.

kingstreet

C&G old reversion rate is base + 2% for life, same as Nationwide.

The Standard Variable Mortgage Rate
The Standard Variable Mortgage Rate (SVMR) is currently 2.50%.

• This is the rate you’ll move onto at the end of any mortgage deal you applied for before 1 June 2010, unless, when
that deal ends, you decide switch to a new deal instead, subject to eligibility.
• It’s a variable rate, so your payments can go up and down.
• The SVMR is guaranteed to be no more than 2% above the Bank of England base rate.
• The SVMR is available only when you get to the end of a deal, not at any other time, and only if the deal that’s ending
was applied for before 1 June 2010.
• If you choose not to stay on SVMR but to take out a new deal instead, then either the Homeowner Variable Rate
or the Buy-to-Let Variable Rate will then apply at the end of this new deal.

https://www.cheltglos.co.uk/mortgages/Your-Account/Interest-Rate-Information