Remortgage advice please

Marie96

Hi

I would be really grateful for any advice please.

Our fixed rate mortgage is due to expire at the end of October with the C&G.

Our LTV is approximately 80-82% and we've never had any problem with meeting any payments. We both have very good credit ratings and are debt free apart from a student loan

I have just started maternity leave and will be on SMP at the time of renewal and as my husband is on a fixed term contract I'm just a little concerned about the impact that this could have. The mortgage only accounts for approximately 3x my salary alone when not on maternity leave and therefore we wouldn't require my husband's salary to be taken into consideration. I have spoken to a number of different lenders and the consensus in the main appears to be that as long as I have a letter from my employer stating my guaranteed salary and that I'm planning to return full-time there shouldn't be any issue with basing the mortgage on my normal salary.

I am however concerned that with the credit crunch this approach to maternity pay may be changed prior to October. Currently my wage slips still show my full salary and therefore I'm wondering whether it would be better to reserve a mortgage now whilst I'm stil on full pay ready for October. With this I just have a couple of questions which I would be really grateful if anyone could answer -

1. As it is just over 6 months before the remortgage is due - can I start applying now - due to the fact that it it is likely to take a few weeks to process the application or do I need to wait until the end of April?

2. If I reserve a mortgage with a lender and pay the reservation fee - could they then withdraw the mortgage offer if things have substantially changed by October?

3. If possible (although not essential) I would like to extend the mortgage term to 30 years - just to give us a little more flexibility during the expensive early years with children! Is that likely to have any impact on a lender's decision? I am just under 30 and my husband is just over 30.

Thank you very much for your help - unfortunately I've got far too much time to think about this prior to baby arriving!



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youngbutwise

I'm sorry I can't help you on this but I thought I'd bump this thread up as I'd love to get advice on this (I'm in a very similar situation).

farhad1965

Marie 96 - my response is below

1. As it is just over 6 months before the remortgage is due - can I start applying now - due to the fact that it it is likely to take a few weeks to process the application or do I need to wait until the end of April?

Much too early, the lenders wont reserve it for you now. Start the process 3 months before the October date. By then there should have been one or two interest rate reductions. I am due to remortgage in August and am waiting for the outcome of next week's Bank of England meeting (10th April) and fingers crossed there will be a .25% reduction. The last one was in Feb '08 to 5.25%, March vote was 8-2 to keep it at that rate.

2. If I reserve a mortgage with a lender and pay the reservation fee - could they then withdraw the mortgage offer if things have substantially changed by October?

When a lender introduces a new offer, it applies to a specific chunk of money that they have borrowed themselves. It could be £1billion or £2billion. When they agree with you a loan of say £200k at %5.89, they will honour that.


3. If possible (although not essential) I would like to extend the mortgage term to 30 years - just to give us a little more flexibility during the expensive early years with children! Is that likely to have any impact on a lender's decision? I am just under 30 and my husband is just over 30.

Cant say much about this apart from the excessive amount of interest you will be paying. Why dont you first start with an interest only mortgage in the expensive early years, then switch to a repayment mortgage? Keep it 25 years if you must, but never 30.

My mortgage is interest only, but I pay off the balance from time to time with big or small lump sums that I have accumulated.

Good luck

jojoyay

Hello,
I'm no expert in this area, but have been doing quite a bit of research myself around this topic as I'm in a similar position to you (cheap fixed rate mortgage coming to the end at the end of this year).

Apparently you can (and should in the current climate) start looking into remortgages at around the 6 month mark. Good deals are disappearing fast. This article says that you can get a broker to reserve a deal for you that will last 6 months (and explains how to avoid paying the fee if you later choose to change to a better deal):
http://www.fool.co.uk/news/property-home/mortgages/2008/03/28/beat-the-mortgage-rate-rises.aspx

And - because of the credit crunch it seems that lenders are not passing on the base rate cuts in their mortgages and even though interest rates are expected to drop, mortgage rates are expected to rise. This article explains more...
http://www.fool.co.uk/news/property-home/mortgages/2008/04/02/first-direct-signals-more-mortgage-meltdown.aspx

If I was you - I'd hedge my bets and try to reserve a good deal in the next month or so but keep an eye on the mortgage market to see if anything better comes along.

hope this is useful for you and congratulations and good luck with your baby.

ps. I find that there are lots of good money websites/newsletters you can subscribe to try keep on top of all this (in busy times!) and get news about the latest deals etc. Apart from the daddy of them all (this wonderful site of course) I'd recommend Fool.co.uk and the 'This is Money' newsletter as well as the Guardian and Times money pages.

farhad1965

Some good news ... was sat in the tube going home just now, doing the Sudoku in the free afternoon paper.... finished it .... looked across and the guy opposite was holding the other free paper with the front page headline BASE RATES TO FALL BY 2% OVER NEXT 18 MONTHS!!!!!!!!!!!!

I was well chuffed!:beer:

jojoyay

Unfortunately, even if base rates do drop by 2% - which is quite probable actually - there is a good chance that this won't filter down to mortgage rates. The base rate and mortgage rates are unusually not tightly linked together at the moment because of the credit crunch. The rates at which banks borrow from each other is currently high and due to get higher so they cannot afford to pass on the base rate cuts to customers.

Which is pretty annoying - I'm coming out of a cheap fix rate at the end of this year and was hoping for good deals too!

caveatvenditor

I cant believe what I'm reading.


Don't people realise that the banks are building their capital again. IT MAKES NO DIFFERENCE IF THE BOE LOWER RATES!! The long term direction for bank rates are UP!!!

Lorne

Our mortgage deal ended at the end of February and the soonest we were able to secure new deals was 3 months ahead