Withdrawal of a Formal Mortgage Offer

nickcarr79

We are currently remortgaging, locking into a 10 year fixed rate with the Halifax since I believe rates will rise - possibly significantly. 

We have a formal offer from Halifax which expires on 28th February 2023. Our current Nationwide mortgage has an ERC due of around £3000 and the new mortgage will be £160 more expensive per month. 

My honest feeling is that if we wait until the end of our current deal in June 2025, it could be significantly more expensive to try and lock into any future deal. For this reason we are happy to pay the ERC and get stability for the 10 years at today's rates. 

Ideally I would like to set the completion date for the new mortage as close to 28th February 2023 as possible, to take advantage of our current lower monthly payment. This, on top of any savings this would make on our ERC, could save around £1200-1300. 

My concern is that Halifax withdraw the formal offer either if the country enters a recession, or if rates rise significantly and they no longer wish to honour the cheaper rate offered in our current formal offer. 

I know offers can be withdrawn for various affordability reasons, or in case of change of circumstance. However, can they choose to withdraw the offer simply because of a recession of an increase in the base rate? And if so, how likely it this really? 

I know much of this may be speculation but genuinely interested to hear opinions. 

Thanks

kingstreet

It's a binding offer, unless something changes in your circumstances or there are question marks over the honesty of the application. In 99.9% of cases it won't happen.

K_S

nickcarr79 said:

I know offers can be withdrawn for various affordability reasons, or in case of change of circumstance. However, can they choose to withdraw the offer simply because of a recession of an increase in the base rate? And if so, how likely it this really? 

@nickcarr79 I couldn't say that it can't/won't happen, but personally, in all my years in this business, I've never seen an offer pulled for the reasons cited above.

sammyjammy

Paying an ERC to go onto a higher rate fixed for ten years is a massive gamble on a rate that has almost three years to go!  What rate are you paying now?

nickcarr79

We are currently on 2.34%, I think the new rate is 3.69%. 

I just don't see mortgages ever being cheaper than they are right now - at least not substantially so I wouldn't imagine. We have been in a period of abnormality really. 

if I overpayed my current mortgage by £166 a month until the end of the term, then if the interest rate at that point was higher than about 5% I would be worse off in the long run. If it goes signficantly higher then it could obviously get expensive.