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  • FIRST POST
    • flambardsdivided
    • By flambardsdivided 9th Feb 18, 5:04 PM
    • 9Posts
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    flambardsdivided
    Should we give up lifetime tracker?
    • #1
    • 9th Feb 18, 5:04 PM
    Should we give up lifetime tracker? 9th Feb 18 at 5:04 PM
    Partner and I are in the process of buying a new house. Moving closer to parents as Dad is very ill and Mum not coping as his carer. We are having to borrow more to do so, as we are moving from a cheap area into a much more expensive one.

    We are long time Barclays customers, over twenty years. We currently have c. 53k left to pay on our mortgage (split into two parts) and 9 years left to pay it. We were very fortunate to get a great lifetime tracker deal when we first took out the mortgage: On 16k we pay 0.85% above base rate (so 1.35%) and on 37k we pay .19 above base rate (so 0.69%).

    At our Agreement in Principle meeting with Barclays in November it was agreed we could port this current mortgage and, crucially, extend the term of it to 18yrs if we needed to. We subsequently decided we did need to extend it, in order to be able to have affordable monthly payments. The house we bought is at the top of our budget.

    For the extra borrowing (which is 163k, taking our total loan to 216k) we have discussed the new rates Barclays would offer us. We are going with a 3-year fixed rate of 1.64% (more expensive than the rates Barclays first showed us in November, which is also not hepling).

    On the basis of these discussions and working out our monthly payment scenarios, we find a house and have an offer accepted. I meet with Barclays yesterday to get the mortgage approved and signed off and the advisor starts off the meeting by telling me that as of January - as in 4 weeks ago - Barclays have changed their policy and they will no longer allow us to extend the term of the 53k part of the mortgage to 18 years. If we want to keep the lifetime tracker rate, we have to keep the term of that part of the mortgage to 9 years. This 'mixed term' scenario makes the monthly payments too expensive. So, the only option is to give up the tracker rate completely and put the whole 216k loan onto the fixed rate. Meaning that although our monthly payments will be affordable, we will be paying much more for our mortgage overall (my maths isn't good enough to do work out how much more). I asked the mortgage advisor if there was anything at all we could do, or anyone we could speak to, but was just completely shut down. If we want to keep the lifetime tracker rate, we can't extend the term and we've missed the boat by four weeks.

    There are numerous articles in the press about banks doing what they can to get customers off of these cheap lifetime trackers. I am supposed to post back the signed mortgage papers today and am sat here hesitating and loathe to do so. I just want to ask if anyone has any advice about either taking it up with Barclays or whether we should just suck it up and accept that we've had a good deal and now we've got to face the reality of our situation and give up our tracker, especially given as the really good rate only applies to about to 37k (1/7 of what will be our new overall loan) and that that base rates are likely to rise so it will not be quite as good a good a deal when that happens and we may be better off on a fixed anyway. We're not clever enough to work out all the maths!

    Thanks for any advice.
Page 1
    • ACG
    • By ACG 9th Feb 18, 5:10 PM
    • 17,023 Posts
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    ACG
    • #2
    • 9th Feb 18, 5:10 PM
    • #2
    • 9th Feb 18, 5:10 PM
    The overall rate you have will probably undercut a lot of what you can get elsewhere. However, there is talk of a rate rise in May, meaning your payments will likely increase in around 4 months.

    If you are going to be struggling, it might be worth putting the whole mortgage on a fixed rate over a longer term, whether that be with Barclays or someone else.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • flambardsdivided
    • By flambardsdivided 9th Feb 18, 5:13 PM
    • 9 Posts
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    flambardsdivided
    • #3
    • 9th Feb 18, 5:13 PM
    • #3
    • 9th Feb 18, 5:13 PM
    Thank you for your response.
    • Thrugelmir
    • By Thrugelmir 9th Feb 18, 5:18 PM
    • 58,891 Posts
    • 52,211 Thanks
    Thrugelmir
    • #4
    • 9th Feb 18, 5:18 PM
    • #4
    • 9th Feb 18, 5:18 PM
    There are numerous articles in the press about banks doing what they can to get customers off of these cheap lifetime trackers.
    Originally posted by flambardsdivided
    Barclays aren't forcing you off your life time tracker. Your financial circumstances are. In that you are looking to leverage yourselves up. Barclays are honouring your existing contract. Even if it's currently losing them money.

    Personally I would try and hang onto these 2 rates. As normality returns in the years to come. Margins over base will progressively widen a little.

    A fixed rate of 1.64% shelters you in the short term. In 3 years time the mortgage market may possibly be very different. You'll then have a sizable debt to refinance. Over what term are you proposing to borrow this money. Is there any possibility of extending it a little. To reduce the cash outgoing impact.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • amnblog
    • By amnblog 9th Feb 18, 5:18 PM
    • 10,547 Posts
    • 4,171 Thanks
    amnblog
    • #5
    • 9th Feb 18, 5:18 PM
    • #5
    • 9th Feb 18, 5:18 PM
    When did you submit your full application, what were the requested lending terms then, and did you receive a full offer based on those terms?

    It is a scenario where you had initial discussions in November but only started the application this week?

    If this short Mortgage term is an issue for affordability you may be able to get a good deal with an alternate lender, particularly since you are only giving up the favourable rate on a quarter of your lending.

    If you have not already formally applied you should put this problem on the toe of a Broker.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • flambardsdivided
    • By flambardsdivided 9th Feb 18, 5:23 PM
    • 9 Posts
    • 1 Thanks
    flambardsdivided
    • #6
    • 9th Feb 18, 5:23 PM
    • #6
    • 9th Feb 18, 5:23 PM
    Thank you very much for responses.

    The discussion in November was for a mortgage agreement in principle. We are now agreeing the precise terms having had an offer accepted on a house. And unfortunately the goal posts regarding the ability to extend the term of the 53k original bit of the mortgage have changed.

    We are not able to further extend the term of the new loan beyond 18 years because of our ages.

    Thanks again for replies, much appreciated.
    • amnblog
    • By amnblog 9th Feb 18, 5:32 PM
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    amnblog
    • #7
    • 9th Feb 18, 5:32 PM
    • #7
    • 9th Feb 18, 5:32 PM
    Bear with me on this but is the property price over 516,000
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • flambardsdivided
    • By flambardsdivided 9th Feb 18, 5:36 PM
    • 9 Posts
    • 1 Thanks
    flambardsdivided
    • #8
    • 9th Feb 18, 5:36 PM
    • #8
    • 9th Feb 18, 5:36 PM
    No, the property price is just under 400k.
    • amnblog
    • By amnblog 9th Feb 18, 5:49 PM
    • 10,547 Posts
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    amnblog
    • #9
    • 9th Feb 18, 5:49 PM
    • #9
    • 9th Feb 18, 5:49 PM
    If it helps to settle your mind, the maths are like this...

    1.35% interest on 16,000 = 216 pa
    0.69% interest on 37,000 = 255 pa

    Total = 471 pa

    Interest on 53,000 at 1.64% = 869 pa

    Difference is 398 or 33 per month

    A 0.25% rate rise is worth 11 a month, so three rises and you are paying the same as the fixed rate anyway.

    (The figures above do not allow for the narrowing of the interest rate gap cost as the 53,000 is repaid, but you get the point)

    By the way, if you are Premier Banking Customers they should have a 1.59% exclusive three year fix available to you.
    Last edited by amnblog; 09-02-2018 at 5:57 PM.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • flambardsdivided
    • By flambardsdivided 9th Feb 18, 6:01 PM
    • 9 Posts
    • 1 Thanks
    flambardsdivided
    Thanks so much amnblog, that is very helpful I really appreciate you taking the time to look at this.

    It does indeed get more complicated and brain frying trying to work out what we might lose over the course of the lifetime of the mortgage.
    • flambardsdivided
    • By flambardsdivided 9th Feb 18, 6:06 PM
    • 9 Posts
    • 1 Thanks
    flambardsdivided
    Does that mean amnblog that by putting the 53k bit of our mortgage onto the fixed rate for 18 years, as opposed to being able to extend and use our tracker rate, we will be paying an extra 7,128 (i.e. the 33 difference x 12mths x 18yrs)?
    • amnblog
    • By amnblog 9th Feb 18, 6:11 PM
    • 10,547 Posts
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    amnblog
    Well, if you cannot extend the tracker rate the whole question is moot anyway.

    But it will not cost 7K in total as each year the interest is being charged on less and less as the capital is repaid.

    Also..

    When Barclays base rates change the maths changes
    When your three year rate ends the maths changes
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • flambardsdivided
    • By flambardsdivided 9th Feb 18, 6:16 PM
    • 9 Posts
    • 1 Thanks
    flambardsdivided
    Thank you. I understand.

    And you're right the point is moot! I think we're just trying to get a sense of the impact of their sudden change in policy.

    Thanks again for replies. it's all very helpful.
    • Thrugelmir
    • By Thrugelmir 9th Feb 18, 6:21 PM
    • 58,891 Posts
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    Thrugelmir
    As an observation. If you struggling to bridge a monthly outgoing of around 226 at the level of current interest rates. Will you pass affordability stress tests.

    In the best case scenario in 3 years time you'll still owe around 182,300. With 5 year fixed rate products at just say 4% interest. Your monthly outgoing would then be 1,363. An increase of 207.

    At a stress test level of say 5.5%. Over a 15 year term. Your repayments would be 1,506 an increase of 350.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • flambardsdivided
    • By flambardsdivided 9th Feb 18, 7:00 PM
    • 9 Posts
    • 1 Thanks
    flambardsdivided
    Thank you Thrugelmir. These are good observations that partner and I have been looking at. Our financially situation is likely to improve, with impending pay rises and some likely inheritance. But we're not taking anything for granted and ensuring that we can viably pay the mortgage in the future is absolutely on our minds.
    • Thrugelmir
    • By Thrugelmir 9th Feb 18, 7:04 PM
    • 58,891 Posts
    • 52,211 Thanks
    Thrugelmir
    But we're not taking anything for granted and ensuring that we can viably pay the mortgage in the future is absolutely on our minds.
    Originally posted by flambardsdivided
    Your lender won't be assuming anything either. All that matters is the facts at the point of application. There's no guarantees as far as the future is concerned.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • getmore4less
    • By getmore4less 10th Feb 18, 2:01 AM
    • 32,174 Posts
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    getmore4less
    If you can't extend the term of the ported part what about extending the term of the new bit.

    You will be paying the capital off quicker for the same payment as putting it all on the 3y fix at 18y.

    Another option may be just port the really low rate on the 37k and fix the other bit it is only 0.29 more and one rate rise will kill it on the tracker.
    Last edited by getmore4less; 10-02-2018 at 2:08 AM.
    • getmore4less
    • By getmore4less 10th Feb 18, 2:41 AM
    • 32,174 Posts
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    getmore4less
    Looking at the options and amount owing in 3 years which is the date you need to change again.


    216k @ 1.64% 18y 1156pm 184,259.

    porting both bits
    16k @ 1.35% 9y 158pm 10,860
    37k @ 0.69% 9y 354pm 24,900
    163k @ 1.64% 644pm 147,467 (26y ish)

    total 183,227 1k saved over 3 years keeping both tracker rates

    or just port the low rate bit

    37k @ 0.69% 9y 354pm 24,900
    179k @ 1.64% 802pm 158,447. (22y 4m ish)

    Total 183,347 900 saved and reduced risk of rate rises.

    The longer term on the new bit won't cost more, what you pay and rates determine the real cost.
    • flambardsdivided
    • By flambardsdivided 11th Feb 18, 12:11 PM
    • 9 Posts
    • 1 Thanks
    flambardsdivided
    Thank you so much for your considered responses and for the maths. It's greatly appreciated.
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