coming to end of fixed rate mortgage, What next?

dragonfly02

Hi there! *waves*
After having a fixed rate mortgage with the Halifax for a year and a half which will be finished in September, I know that the rates will go up if we sit back and do nothing but I am not sure which steps we should take next.

Can someone offer some advice on what we should do please?

Once you have had a fixed term mortgage for the full term and apply for another fixed rate is that classed as remortgaging? if not what term am I looking for?

Thanks in advance

jessie59

Hi......

This is exactly our situation but our fixed term ends in October. Basically, we are unsure whether to wait until then to change (bearing in mind rates are currently increasing) or remortgage now which would incurr penality fees!!!

I so wish that we had taken out a 5 year deal instead of a 2 year deal:mad: !!!

Not sure what to do now though!! Last time we remortgaged I took Martin's advice and used 'London & Country' who offer a free service http://www.lcplc.co.uk/ they are mortgage brokers. They were excellent last time we used them and sorted out everything for us and constantly kept in touch - we are thinking about contacting them again to ask advice. The problem is nobody really knows what the future holds, it is purely speculation!

dimbo61

back to the halifax and ask what they can do for you dragonfly 02
they are offering some good deals for existing customers and if you have a
good record of paying your mortgage and good equity in your home then
there will be no problem getting a new deal without having to move lenders.
The rate of your mortgage will go up I think because rates have gone up
so review your finances and see if you can clear some of your mortgage
GOOD LUCK

barrymoney

I would 2nd what dimbo just said -- halifax offered me a new deal recently which was ok (given the current climate!). Who knows how things will look in september, although thats still a fair few months away. Its not a 'remortgage' if you switch deals with current lender. they don't ask many questions either, because its not a 'new' mortgage.

holidayqueen

Just finished a 2yr fixed rate morg with nationwide in feb, and got a new 5yr fixed rate with them for an extra £10 a mnth.
We have had an independant financial advisor for 6 yrs now, he found the deal and because it was with the same institution the fin/adv could not apply for it for us. He did the work, I rang up, it took 10mins over the phone, docs rec within 7 days, signed/ret and all commenced in mar it was as easy as that.
Fin adv made no profit from the work as he is independant and it cost me nothing.

vdh

Completely agree with the two earlier posts about calling up Halifax to see what they can offer.

I got my remortgage sorted only this week and my research helped me draw the following conclusions (my opinion). I have an equity of 25% in my property and was looking for a 20 year repayment mortgage. The only issue is that I am not a British national and hence at least half the lenders won't talk to me:

1. Fact: BoE trackers have gone nuts. Cheapest I could get was 1.03% above BoE rate for 2 years. It implies that lenders are expecting BoE rates to fall as cheapest fixed was about 0.75% above BoE rate.

2. 1st conclusion is backed up by another fact: Cheapest fixed rate available was either 5.72% for 3 years (Abbey) or 5.99% for 2 years (Halifax - I have taken this one) or 5.88% for 1.5 years (C&G). In order for tracker (non Halifax) to be equal to Halifax's fixed rate, all you need is just one rate cut of 0.25% and two rate cuts of 0.50% in total will make the tracker equal to Abbey's fixed rate for 3 years. So, rates are likely to fall sooner rather than later.

3. Now, the question is if BoE rate cut benefit is likely to be passed on to the customers. My conclusion is: NO in the foreseeable future as the 5.99% deal that I literally took yesterday is going up to 6.29% on Monday. (May be other deals and trackers are too). If benefit of rate cuts was to be passed to the customers, fixed rate should not have become more expensive

4. Latest issue of The Economist states that intra-bank loan rates topped 6% this week (it did not quote the reasons but not difficult to guess - credit crunch). This makes it easy to understand why Halifax's fixed rate is going up over the weekend as I write this.

Bringing it all together, BoE rates should fall and hence tracker makes sense but only if it is up to 0.5% of the best fixed quote as assuming two rate cuts (0.25% each) in the next 6-9 months will equalise it to the fixed rate and if it falls just once more, the rest of the term (presumably 1-1.5 years) becomes cheaper than the fixed rate product.

The reason for above said conclusion is that I personally see things getting a lot worse before they start getting any better and this cycle can easily take up to next couple of years as things have to be stable for at least 6 months for banks to become bullish. When things become worse, BoE has to cut rates (although it risks inflation). Given that elections are due sometime soon, Govt. will have to take more drastic inflation control measures than just maintaining higher interest rates; so, it won't hesitate to cut interest rates to inject liquidity into the system (as that means one less thing to worry about for the likes of Brown and Darling.)

Again, I am just thinking aloud and won't like to be hold responsible for any financial decisions that you make.

Good luck with everyone's remortgages and it would be good to know other people's experiences. :beer:

barrymoney

I like your analysis, vdh. I wasn't offered a great fixed rate to move to, so I took the better tracker, even though it is a risk...

digimortal_2

after comming to the end of a 5yr fix on a low rate(4.39%), we have gone for a lifetime tracker BoE +0.58, due to start may.. but if the BoE rate go up by 10%(its extra £330/month for us), so yeah its a risk.. but a calculated risk, as we hope to overpay each month and reduce the amount.. we have no loans, no credit cards.. and a small(decreasing) mortgage..

I guess its all about living to your means.. and saving before you buy and not taking unnecessary loan's/credit card's on everything..
:beer:

vdh

digimortal wrote: »

after comming to the end of a 5yr fix on a low rate(4.39%), we have gone for a lifetime tracker BoE +0.58, due to start may.. but if the BoE rate go up by 10%(its extra £330/month for us), so yeah its a risk.. but a calculated risk, as we hope to overpay each month and reduce the amount.. we have no loans, no credit cards.. and a small(decreasing) mortgage..

I guess its all about living to your means.. and saving before you buy and not taking unnecessary loan's/credit card's on everything..
:beer:

Good stuff! Yes, I completely agree and actually now I have opted for HSBC BoE + 0.38% lifetime tracker myself with no lock in period (£599 arrangement fee).

By the way, HSBC is about to start a very aggressive marketing campaign for next 5 weeks offering to match the existing mortgage rates of borrowers (even non HSBC customers). It was mentioned in the Financial Times of thursday. The headline news feature also mentioned that with just 3% UK mortgage market share and no dependency on wholesale money markets, HSBC is all set to offer very competitive rates to grab new business. My personal opinion is that it will still cherry pick the business and the key will be to watch out for the arrangement fee and other hidden expenses on top. In turbulence, there are some clear cut winners and HSBC looks like one of them with more robust business model of no dependency on inter-bank loans.

techno12

I'm coming to the end of my 2-year fixed soon.

That HSBC BoE +0.38% looks unbeatable, I haven't seen anything that comes remotely close!
My current lender (IF) has just offered me a tracker, but with a 3-year 'discounted' lock-in period, and even then it's somewhere approaching BoE +1.5%, not even on the same planet as the +0.38% the HSBC is offering!