Fixed rate running out in 6 months, just been made redundant

bluep

My mortgage fixed rate with HSBC runs out in 6 months and the SVR is a good 1.5% more.  I've not missed a payment, although did take a 3 month payment holiday when work temporarily reduced our hours and salary for 3 months last year in a panic and was assured at the time it wouldn't affect my credit record.  I'm getting a pretty good redundency package and should have a new job in the next 6 months as the industry I work in is bouyant and not affected overall by Covid19 thankfully.  However if a new role doesn't come along, I can do what I do on a self-employed basis and earn enough to live on so this is my plan whilst looking for the right new role.

I've never applied for a new mortgage rate deal however without being in full time long term employment - it's always just been a tick through exercise before.  If I'm wanting to stay with the same bank and moving to a different fixed deal, will they still do this despite my change in circumstances or will they trap me on the SVR until I get another job?  Seems really unfair to trap me on SVR as I'll be paying a monthly mortgage payment to them anyway whether its on SVR or a new 5 year fix...I'll have a large sum of redudancy payout sitting in their bank account...

K_S

bluep said:

My mortgage fixed rate with HSBC runs out in 6 months and the SVR is a good 1.5% more.  I've not missed a payment, although did take a 3 month payment holiday when work temporarily reduced our hours and salary for 3 months last year in a panic and was assured at the time it wouldn't affect my credit record.  I'm getting a pretty good redundency package and should have a new job in the next 6 months as the industry I work in is bouyant and not affected overall by Covid19 thankfully.  However if a new role doesn't come along, I can do what I do on a self-employed basis and earn enough to live on so this is my plan whilst looking for the right new role.

I've never applied for a new mortgage rate deal however without being in full time long term employment - it's always just been a tick through exercise before.  If I'm wanting to stay with the same bank and moving to a different fixed deal, will they still do this despite my change in circumstances or will they trap me on the SVR until I get another job?  Seems really unfair to trap me on SVR as I'll be paying a monthly mortgage payment to them anyway whether its on SVR or a new 5 year fix...I'll have a large sum of redudancy payout sitting in their bank account...

@bluep I can't speak for HSBC but I've done a couple of product transfers for my clients (who had taken covid payment holidays) with other mainstream lenders and it wasn't an issue at all. It was just the normal process - no income checks, no affordability checks, no credit checks etc.

dimbo61

Well good luck on finding a new job ASAP.
If you do get a new job or go self employed why not consider paying a lump sum off the mortgage ! Say 10% 
You can usually change to a new deal online as long as your not trying to borrow more or change the term.
Read the T&C,s carefully to check if overpayments are allowed

bluep

dimbo61 said:

Well good luck on finding a new job ASAP.
If you do get a new job or go self employed why not consider paying a lump sum off the mortgage ! Say 10% 
You can usually change to a new deal online as long as your not trying to borrow more or change the term.
Read the T&C,s carefully to check if overpayments are allowed

Thanks - I’m going to keep as much of my redundancy payout in savings for as long as possible, clear a small amount of credit card debt and a couple of things on instalments like annual car insurance to decrease monthly outgoings.  Mortgage and school fees are the two big monthly lumps. 

If I then get a new role relatively quickly, I’ll consider making an overpayment on the mortgage after a probationary period.  If I go self-employed then I’ll keep it until I have a clear idea of how much business is flowing in. 

bluep

K_S said:

bluep said:

My mortgage fixed rate with HSBC runs out in 6 months...

@bluep I can't speak for HSBC but I've done a couple of product transfers for my clients (who had taken covid payment holidays) with other mainstream lenders and it wasn't an issue at all. It was just the normal process - no income checks, no affordability checks, no credit checks etc.

Thank you - that’s reassuring.  I was hoping the bank would see it as product switching rather than a new lending decision. After all I’m arguable less of a risk on a new fixed 2% deal than staying on the SVR of 3.5%.  I’m still paying it and still in the house after all.  I’ve never missed a payment on any credit account.  

Sounds like they look at it as - how do we fix you in for more years rather than hmmm let us consider your finances again.

getmore4less

You will probably be looking at retention deal.
You should be able to  switch early without ERC. 

Cash retention is needed till income restored sustainably.

What's your LTV? 

bluep

getmore4less said:

You will probably be looking at retention deal.
You should be able to  switch early without ERC. 

Cash retention is needed till income restored sustainably.

What's your LTV? 

LTV is around 73-78% - 212k outstanding and house is worth 270-290k.  I'm on a 3 year fixed rate that expires and just want to roll into another 3 or 5 year fixed rate - I'm not concerned about finding the absolutely most competative one, just something better than the SVR and their current 3 or 5 years fixed rates are below my current rate anyway.  I'm one of their premier account holders and have banked with them for 25 years - my main salary has always been paid into my HSBC account and they will be able to see a >£50k balance with them.  I have enough across savings and redundancy payout to cover mortgage and bills for around a year. 

However I have a number of promising job prospects lined up so I'm hoping to start something in the next couple of months - it's more a case of getting the right role rather than jumping into something out of pure desperation.  If I do get desperate and 8 months down the line still no job, then rather than remortgaging I'd probably consider selling the house and moving back in with my mum for a while.

Whats ERC?

getmore4less

early repayment charge

You are going to want to get to 75%  the rates are a lot better,
£999 fee
75% 5y 1.69% 
80% 5y 2.29%

bluep

getmore4less said:

early repayment charge

You are going to want to get to 75%  the rates are a lot better,
£999 fee
75% 5y 1.69% 
80% 5y 2.29%

Yeah I think what I could do is if there's an issue with the house valuation being 280 or lower, I could make a small overpayment to bring the LTV percentage down.   The main concern was whether me being redundant was going to be an issue.