Mortgage charter and move to new deal

rugbyrod25

Looking for advice, im currently in a the middle of interest only mortgage charter support on my mortgage, however my current deal ends May the 1st and i will revert to SVR, which of course i dont want to spend the duration of the charter support paying interest on 8%, so i plan to move to a new fixed deal with the existing lender, has anyone experience of this? is it seamless? do they conduct affordability checks as ill be moving from the interest only to capital repayment, albeit the capital repayment will be more affordable than the interest only on SVR, but i know sometimes common sense doesn't come into play. So in essence i went from fixed deal, to currently short term interest payment on the same deal, never missed a payment, all up to date and want to switch with existing lender to a new fixed deal. any feedback welcome. thanks

Hoenir

You'll have arrears of capital to repay.  I'd suggest speaking to your lender. You need to come to an arrangement that is suitable. Little point in committing then ending up with further problems in the months ahead. 

ACG

I dont know the answer and suspect it could differ from lender to lender. 
Most lenders allow you to log on and choose a new deal 3-6 months before your deal expires. So you could log on now and/or the 1st March to see if you can choose a new product. 

rugbyrod25

Thanks for the feedback, i'm not sure the arrears of capital applies here as the agreement wasn't to pay capital and payments weren't missed based on this.

rugbyrod25

Update, ive spoken to Virgin (my lender), basically i have to call up in April, cancel the mortgage charter interest paymnets and then i can look at switching, as the arrangement is in place and is temporary you cannot switch on line. what i dont know is if there will affordability checks etc again to switch to a new Fixed rate deal, even though its with the same lender. The payments will go up obviously from the short term interest only im paying, but it will be a hell of a lot cheaper than the interest payment on the SVR, which from an affordability point of view should be a no brainer.

Hoenir

rugbyrod25 said:

Thanks for the feedback, i'm not sure the arrears of capital applies here as the agreement wasn't to pay capital and payments weren't missed based on this.

Sorry if I wasn't clear in my post. By only paying the interest and not the capital. The capital you should have repaid has now to be repaid over remaining months of your contractual mortgage term. Resulting in an increase in your monthly outgoings. 

When your current fixed term product ends will the rate the interest on the next product be significantly higher than you are currently paying?  This above would increase your monthly outlay. 

If personal finances are challenging better to have an open discussion now and see if there's some flexibility, i.e. extending the mortgage term. 

rugbyrod25

yeah so i have 15 years left so understand the capital not paid will be added to this term.

Yes the rate will jump up from 2 to circa 4.5% which i can afford on capital repayment more so than if they stick me on the SVR which is 7.5%, from a common sense point of view it should be easy to do, however I know lenders dont always work like this. 

It would have been an easy switch online if i hadn't taken up the mortgage charter support for the 2 months i have used, but i cant do this now. so i now have to call them and end the interest payment and then look at a new deal.

my question is because of this mortgage charter arrangement on my current deal does it mean its a new mortgage application or a product switch to a new deal? i cant seem to find the answer to this anywhere.

Hoenir

You really are the behest of the lender. The mortgage charter works both ways. There is however absolutely no reason for the lender to impose SVR on you. As much as lenders have a bad name. That's not how they commercially operate. 

MWT

In theory at least, once you cancel the Charter arrangement you return to your previous product and will then be able to choose a new repayment product just as you would normally have done and without any new application.

... but you are in relatively uncharted territory so I would not leave it until the last moment to do this just in case...

ACG

rugbyrod25 said:

Update, ive spoken to Virgin (my lender), basically i have to call up in April, cancel the mortgage charter interest paymnets and then i can look at switching, as the arrangement is in place and is temporary you cannot switch on line. what i dont know is if there will affordability checks etc again to switch to a new Fixed rate deal, even though its with the same lender. The payments will go up obviously from the short term interest only im paying, but it will be a hell of a lot cheaper than the interest payment on the SVR, which from an affordability point of view should be a no brainer.

Unless the mortgage charter changes anything, there shouldnt be. My mortgage is with Virgin and when I do a Product transfer, its relatively painless. 

rugbyrod25

Can you explain in terms of mortgage charter changing anything? i'm on interest only, so the capital will be added to the term of the mortgage.