48k Mortgage Tracker or Fixed Rate? (Repayment)

Gorgeous_George

The adviser could be right.

Interest could be charged at whatever rate applies on the day. You could pay whatever is set in September. Each September you could get a statemenmt showing how much interest has been charged and how much your payments have been. This would then show how much is outstanding on the loan and how much repayments would be for the remaining term of the mortgage. I had a similar arrangement some years ago (about 15 years) but I wasn't on a tracker.

If you intend to overpay anyway it won't matter if this mortgage is similar.



GG

bargainquest

The mortgage I took out in April with The Woolwich/Barclays tracks 0.23 above the br. I learned to my surprise over the phone today that it is reviewed annually on Sept 30th and the monthly payment adjusted. He said that when the rate rises less capital is paid out of your monthly payment to compensate for the increased interest rate - they increase your rate annually to ensure that your mortgage term ends when you planned it to.

I am sceptical about this and a bit annoyed that no one told me about it-I don't like the fact that potentially you could get a nasty shock every September if rates rise! The whole reason I wanted a tracker was to benefit quickly if rates eventually go down a bit.

Keith:)

bargainquest wrote: »

The mortgage I took out in April with The Woolwich/Barclays tracks 0.23 above the br. I learned to my surprise over the phone today that it is reviewed annually on Sept 30th and the monthly payment adjusted. He said that when the rate rises less capital is paid out of your monthly payment to compensate for the increased interest rate - they increase your rate annually to ensure that your mortgage term ends when you planned it to.

I am sceptical about this and a bit annoyed that no one told me about it-I don't like the fact that potentially you could get a nasty shock every September if rates rise! The whole reason I wanted a tracker was to benefit quickly if rates eventually go down a bit.

I am concerned about this, I do not like the throught of annual review surely this offer is really a fixed rate for a year and is reviewed annually... once the paperwork arrives I think I might review my options... dont like the thought of either under paying or over paying and I am not sure how to work it out...

If in December interest rates rise or fall 2% for 9 months I am over/under paying so what happens in Sept do they suddenly charge me for the shortfall or the overpayments, when do they credit my balance with the over payments to reduce my overall loan! Too many questions I think, its a real uneasy situation until I get the paperwork.

He made me feel a bit uneasy when completing the application over the phone as I said I would want to read the paperwork first and he said well you shouldnt complete the application unless your 100% certain and I said well I am not... then at the end of the call he said the product I am having and said is that correct to which I responded unless you are going to tell me there is an amazing product better and he said there were lower rates but if I changed my mind he would apply an admin fee! Gees

Sorry for the he said I said!

Keith

Keith:)

Ok Just called Woolwich and asked to confirm rate changes and its September each year, have looked at britannia and theirs changes the month after the change so much happier with this even if the APR is 6.4% compared to the Woolwich one of 6.1%.

Asked if I could cancel as I have not signed anything and he said he would have to put me through to an advisor but it should be OK. fingers crossed paperwork arrives tomorrow and can be cancelled then the search will start again but Britannia seems good at the moment.

nationwide 6.3% and changes on the 1st of each month!

bargainquest

I think you did right to ditch the Woolwich and although I am no expert, would doubt they can hold you to anything without your signature - they were quick to tell me that rates were changing quickly in April and they couldn't guarantee this rate until I had sent back the signed forms. Despite past good experiences of being a Woolwich customer, they really annoyed me with countless silly errors on their paperwork - I am seriuosly considering changing my mortgage despite only having had it 4 months - you are right that it's like a one year fix - very odd! Fortunately it has no tie in or penalties so maybe I will ditch it. Natwest are hounding me to change to their fixed rateof 5.8 although I'm not sure yet...

Gorgeous_George

What would happen is that the rate used on the account would change with Base Rate changes but your payments would change just once a year.

Effectively, an increase in rates would see your term extend and a fall in rates would see the term contract. The payment would be reset each September to ensure the mortgage ends on th ecorrect date.



GG

MissScarlett_3

I have just taken out this mortgage, not finalised yet so could cancel but as I intend to make overpayments it isn't an issue that the repayment figures are recalculated on 1st Sept each year. Changes to the BR aren't going to happen that frequently(fingers crossed).
I did however think that the repayments would change as and when the BR changes and the KFI confirms that changes in the BR made during the month will take effect from the 1st of the following month, there is nothing to confirm however that payments will only change once per year, you would think that that would be a key fact they should mention?

I am still happy to proceed, it's a very competitive rate.

bargainquest

Having thought about it and overcome my initial annoyance with their poor communication I am sticking with it. It's not a bad idea having your monthly payment fixed for a year.

MissScarlett_3

It is odd, should call it a fixcker mortgage as its a mixture of both tracker and fixed!

I looked at the Britannia tracker mortgage after reading this post but It has an Arrangement fee: £399 Admin fee: £100 and the valuation is payable by the customer also and is 0.40% above BR.

I don't think the once a year change to repayments with the woolwich is so bad that I would change to the Britannia.

Keith:)

True to form I have the paperwork and guess what...

Item 4. Description of this mortgage:

A variable rate which is 0.17% above our base rate (currently 5.75%) for 276 months, giving a current rate of 5.92%. Changes in our base rate made during the month will take effect from the 1st of the following month.

Called to confirm and its correct the guy I spoke with was wrong, thats two of their staff giving me incorrect information... looks like I am back on with the Woolwich.

Thank you all so much with your answers and advice appreciated as always!

:T