Mortgage Company have dropped their rate. What can I do?

MikeLondon_3

Hi there,

Just a quick question really. We have had a mortgage offer at 6.14 fixed for 5 years. We've done the survey etc. all documents are now with our solicitor.

However, I've noticed the the mortgage company have dropped their rate to 5.88 for 5 years now. Can I get my mortgage rate dropped to this level?

Will my broker be able to do this? is it a load of hassle for him? will I need a new survey?

Thanks in Advance,

Mike.

withabix

You applied for the mortgage at the original rate and in doing so you reserved the money at that rate. Most lenders (especially those like Northern Rock who rely on the money markets for mortgage funding) have blocks of money available at certain rates. When these run out, the deal changes, up or down.

You won't be able to go and get the other rate without paying the arrangement fee again. How much is your mortgage and what is the arrangement fee? It probably isn't worth it for a 0.26% swing.

Think of it the other way round: if you reserved at 6.14% and they put the rate up shortly afterwards, would you happily take the new rate???

I think not, so why should they offer you the lower rate?


I recently took a 2.99% for 12 months, 5.99% for 4 years deal with no hangover and no arrangement fee.

Two days after I applied for this deal, the rate went UP to 3.99%/6.49%, but I still got the original deal.

That's the way it works.

MikeLondon_3

The mortgage is for £238,500 with a 10% deposit.

As far as I understood it, I've paid for the survey, but if I wanted to, I could walk away now and go with someone else, so I've not paid an arrangement fee yet?

A £50.00 saving over 5 years works out as £3000 saved.


I appreciate the sentiment of not wanting them to up my rate if their rate changed, but this is a money saving forum, and I'm after trying to save some money.

[Deleted User]

Sometimes the arrangement fees are added to the mortgage, so you don't start paying them until your mortgage starts. The fact that they carried out a survey on your behalf tells me that you might not be able to walk away at this point. Give your lender a call and find out exactly where you are on this.

Mortgagehero

As you have not completed on the mortgage yet you are still able re-apply for the lower fixed rate deal. You may have to pay for another survey, depends on the lender and how reasonable they are. If you tell me which lender it is I will attempt to find out for you.

MarkyMarkD

Some lenders will let you pay a fee to change the product to the new one; others will not.

If yours is in the latter category, then all you will lose is the survey fee as your lender doesn't charge application fees up-front.

Many lenders DO charge application fees up-front; if you had been in this situation, you'd be liable to lose both application and valuation fees.

But the rate differential you are talking about is very significant so unless you are a bad credit risk, it is almost definitely worth you going elsewhere unless the lender will allow you to pay to change products.

MarkyMarkD

withabix wrote: »

You applied for the mortgage at the original rate and in doing so you reserved the money at that rate. Most lenders (especially those like Northern Rock who rely on the money markets for mortgage funding) have blocks of money available at certain rates. When these run out, the deal changes, up or down.

This is rather misleading. You are confusing funding with interest rate risk management.

Whether lenders are mainly wholesale (like Northern Rock) or mainly retail (like Nationwide, for example) funded, they will still use interest rate swaps to manage their interest rate risk, and they'll still have tranches of fixed rate lending associated with particular rates.

So your comment applies equally to mainly retail-funded building societies as to mainly wholesale-funded banks.

MikeLondon_3

Thankyou all for your helpful replies.

In reply to Mortgagehero, the lender is Abbey.

They have been good so far, as has the broker in helping us at every step of the way, but £50-£60 a month for 5 years is a lot of money, and certainly something I'll do my best to try and save!!!

MarkyMarkD

I'd be surprised if they wouldn't allow you to pay a "change of product" fee, as they don't want to lose your business having gone through all the effort of underwriting your case.

MortgagesInc

Abbey don't charge anything to move to a new rate, even once it's been offered. The only thing you need to make sure of is whether you had any incentives with the old rate, such as free valuation.

Dan_Collins_2

Your broker should do this for you, no probs. Although Abbey can be slow!