Actual 2 year fixed term length shortened 26 October 2022 at 9:02PM in Mortgages & endowments 12 replies 706 views

Dermiemac

Just want to flag/check if a 2 year fixed term (for example) can normally be cut short by a few months? Is this common knowledge?

I got an offer from HSBC via a broker in December 2019, and then completed on the house and drew down the mortgage at the end of March 2020. So I thought I was ok until then with regards payments and a new deal, but it turns out a "Fixed Rate Period" was specified in the offer, ending in December 2022, I am losing 4 months of payments at the lower rate of this current mortgage, essentially costing several hundred pounds, as I'm getting shifted to a new higher rate sooner than expected.

My broker says only Nationwide stick to their term from drawdown, is this standard practice?

Serve_the_Servants

Dermiemac said:

Just want to flag/check if a 2 year fixed term (for example) can normally be cut short by a few months? Is this common knowledge?

I got an offer from HSBC via a broker in December 2019, and then completed on the house and drew down the mortgage at the end of March 2020. So I thought I was ok until then with regards payments and a new deal, but it turns out a "Fixed Rate Period" was specified in the offer, ending in December 2022, I am losing 4 months of payments at the lower rate of this current mortgage, essentially costing several hundred pounds, as I'm getting shifted to a new higher rate sooner than expected.

My broker says only Nationwide stick to their term from drawdown, is this standard practice?

Hate to say it, but it definitely sounds like something a bank would do. 

penners324

What does the original contract say about the finish date of the fixed term?

Even a bank can't just change the rate part way through

housebuyer143

Yes, lots of lenders specify fixed dates for the end of fixed mortgages. It works the other way too, where you end up with more than 2 years which can be just as annoying.

It will have been in the mortgage offer you signed so there's is nothing you can do

Your broker is wrong in that it's just nationwide who don't.. Loads don't and go from drawdown but equally a good number do have end dates.

onemouseplace

This is in our Natwest offer - we have a 5 year fix, but the discount rate actually runs from the end of the month we got the offer.  So as our purchase is taking forever and will run pretty much up to the date our mortgage offer runs out, it is really a 4.5 year fix for us. 

I have just checked and at least we don't have to pay an ERC beyond that shorter date which is something!

K_S

Dermiemac said:

Just want to flag/check if a 2 year fixed term (for example) can normally be cut short by a few months? Is this common knowledge?

I got an offer from HSBC via a broker in December 2019, and then completed on the house and drew down the mortgage at the end of March 2020. So I thought I was ok until then with regards payments and a new deal, but it turns out a "Fixed Rate Period" was specified in the offer, ending in December 2022, I am losing 4 months of payments at the lower rate of this current mortgage, essentially costing several hundred pounds, as I'm getting shifted to a new higher rate sooner than expected.

My broker says only Nationwide stick to their term from drawdown, is this standard practice?

@dermiemac Your broker is indeed correct. With most lenders, the product that you apply for has a fixed end date (which is rolled forward every few months) which will be approximately 2/3/5/7/10 years from then, give or take a few months. So depending on when you apply and complete, the actual length of the fixed period (from completion) can vary.

A minority of lenders (Nationwide being one example) give a true 24/36/60 months from completion. So if you complete on 15 Dec 2022 on a Nationwide 2 year fix, the fix will end on 31 Dec 2024.

Either way, the above will have been clearly laid out in the illustration/KFI/quote shared by the broker prior to getting your go ahead for a full application.

sully1311

This is why it's imperative that you read your Mortgage Illustration carefully. 

ACG

Most mortgage lenders launch products with maybe 27 months on it. 
It works on the assumption it will take most people 1-3 months to complete. If you apply the day the product is launch and complete quickly, you may get more than 24 months. But it is also possible you will get less. 

Historically with rates going down, people have been happy when the deal ends early the opposite can be said now. 

kingstreet

Product end-dates are a symptom/feature of securitisation. You can't bundle together thousands of mortgages into a RMBS (Residential Mortgage-Backed Security) with different end-dates.

adamL

I got a 2 year rate in June 2021. Thought it expires in June 2023. Turns out it's October 2023. That's 4 months more than a 2 year fix. 

Dermiemac

K_S said:

Dermiemac said:

Just want to flag/check if a 2 year fixed term (for example) can normally be cut short by a few months? Is this common knowledge?

I got an offer from HSBC via a broker in December 2019, and then completed on the house and drew down the mortgage at the end of March 2020. So I thought I was ok until then with regards payments and a new deal, but it turns out a "Fixed Rate Period" was specified in the offer, ending in December 2022, I am losing 4 months of payments at the lower rate of this current mortgage, essentially costing several hundred pounds, as I'm getting shifted to a new higher rate sooner than expected.

My broker says only Nationwide stick to their term from drawdown, is this standard practice?

@dermiemac Your broker is indeed correct. With most lenders, the product that you apply for has a fixed end date (which is rolled forward every few months) which will be approximately 2/3/5/7/10 years from then, give or take a few months. So depending on when you apply and complete, the actual length of the fixed period (from completion) can vary.

A minority of lenders (Nationwide being one example) give a true 24/36/60 months from completion. So if you complete on 15 Dec 2022 on a Nationwide 2 year fix, the fix will end on 31 Dec 2024.

Either way, the above will have been clearly laid out in the illustration/KFI/quote shared by the broker prior to getting your go ahead for a full application.

Thanks all. I think it's a bit ambiguous as there are 24 payments also clearly stated at the fixed rate in the mortgage illustration, along with the total number of payments. As per @adamL sometimes it can work in your favour, it hasn't this time for us!

I just hadn't seen this detail or it discussed anywhere online either when I was looking for for confirmation, so appreciate the feedback on here.