Actual 2 year fixed term length shortened
in Mortgages & endowments
12 replies 706 views
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?
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Even a bank can't just change the rate part way through
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.
I have just checked and at least we don't have to pay an ERC beyond that shorter date which is something!
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.
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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.