Simple mortgage question

money-savvy-suzy

Hi just wondered if anyone can clear this up for me....

When you sign up to a mortgage deal and it says the following:

x rate until 2010
then x rate thereafter

Does this mean that you are tied into the deal until 2010 only? Or are you also tied into the deal at the higher rate for the remainder of the mortgage?

Sorry if this sounds like a simple question, but it's really confusing me

Thanks x

JF77

Hi, you would be tied in until 2010. What you are looking for is the early redemption period and charge.

UK007BullDog

OK they did not explain to you?

You are tied in to the rate until 2010. So if fixed that is what the rate will be until 2010. If a tracker it can still go up and down.

Then thereafter the rate reverts to the SVR (Standard Variable Rate) of that lender. As we do not know what that rate will be in 2010, the lender is going by the present rate.

So in 2010 you will be looking for a new deal just before your rate expires so might not need to worry too much about that rate, however it is a good indicator just in case rates go up that you know what to expect and to ensure you can still afford the mortgage.

Hope this helps.

UK007BullDog

JF77 wrote: »

Hi, you would be tied in until 2010. What you are looking for is the early redemption period and charge.

You would only need to worry about this if you planned to sell or pay off your mortgage before the rate finishes, i.e. before 2010.

Dan_Collins_2

You need to check the section; what if I dont want this mortgage anymore? This will detail the redemption penalty and periods. The section you are talking about is about rates and payments.

InMyDreams

money-savvy-suzy wrote: »

When you sign up to a mortgage deal and it says the following:

x rate until 2010
then x rate thereafter

Does this mean that you are tied into the deal until 2010 only? Or are you also tied into the deal at the higher rate for the remainder of the mortgage?

Surely it doesn't mean either? It doesn't tell you anything about the length of the tie-in. On most mortgages, the tie-in seems to coincide with the end of the deal (ie 2010 in this case) but not always. As JF77 says, what you need to look for is the early redemption charge (ERC) and how long it will apply for. You must make sure you know long you will be tied in for. Don't assume anything.

Edit: Argh, sorry Dan... cross-posted!

UK007BullDog

It would help if we knew lender and what type of deal. Fixed? Tracker? Variable (probably not)?

There could be more tie ins, but just going by the info we have the OP is definitely tied in until 2010.

After the deal has ended the OP does not seem to be tied in, but might have to give a months notice in case they want to move to another lender.

The best is to speak to the supplier of the document to clear up any misunderstanding.

InMyDreams

UK007BullDog wrote: »

It would help if we knew lender and what type of deal. Fixed? Tracker? Variable (probably not)?

There could be more tie ins, but just going by the info we have the OP is definitely tied in until 2010.

After the deal has ended the OP does not seem to be tied in, but might have to give a months notice in case they want to move to another lender.

The best is to speak to the supplier of the document to clear up any misunderstanding.

I didn't get the impression that the OP had a specific lender or deal in mind, but that this was a general question and she was simply trying to get her head around the jargon to better inform herself. Whether or not she uses a broker in the end, it's good to be able to understand the lingo yourself.

Also, why is she definitely tied in until 2010? She hasn't given us that info. She has given no info on tie-ins. I know most deals tie you in until the end of the special rate at least, but FD had a variable deal until the end of the year with no tie-in at all, even during the special rate.