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AIBU?

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Original poster

To beg for some mortgage advice

52 replies

Goldenbrowns · 02/09/2022 07:20

DH and I are going round in circles and he is getting more and more stressed and I am getting more and more confused.
I’ll try to explain the best I can:

A few years ago before covid, war and craziness we took out a 5 year fixed rate at a decent, low rate.
The fixed rate doesn’t end until next October
We have to pay a £4000 fee to get out of the mortgage any earlier
Currently the best rate we can find to fix at is 3.5%
I think DH has worked out that rates only have to to up to 4% before it’s worth paying the early redemption fee.
So do we cut losses and change mortgage now or hang on and risk getting a worse rate?

It’s worth mentioning that we are fortunate to be able to afford higher rates if necessary as this was always a consideration when buying the house and we can spread it over longer if necessary but we both hate wasting money and it’s messing with DH’s head. He’s already kicking himself for not fixing for longer before hand.

Id really appreciate any advice from those in the know.

OP posts:
Kfjsjdbd · 02/09/2022 07:25

Why don’t you use a broker and they can discuss all your options, plus the financial implications and may get better rates. Some brokers are free.

Carpy88999 · 02/09/2022 07:25

Why don't you speak to a professional rather than a bunch of idiots on here (myself included) who don't know or understand the complexity of the mortgage business.

NoSquirrels · 02/09/2022 07:27

What is your current “decent low rate”?
No one can help without that info!

stairgates · 02/09/2022 07:27

Thats a high penalty, are you sure that hasn't decreased as your mortgage has gone along?

AhNowTed · 02/09/2022 07:27

We used a broker.

He was excellent and the mortgage company paid him.

Got us a fantastic deal at a low rate and no penalty for paying off chunks when we could.

TuxedoJunction · 02/09/2022 07:32

If you’re going to make the switch Op, you probably need to do it soon. The Bank of England have another rate review looming in 2 weeks time. Interest rates are predicted to rise again. Banks/lenders will swiftly follow and increase their offerings too, so you’ll most likely be looking at nearer 4% by the end of September.

Mangledrake · 02/09/2022 07:34

I did this - paid early redemption fee to get a (slightly worse) five year deal than the one I was leaving. It was just about a break even situation. I'm enjoying the peace of mind. Why not apply - you'll get a month or so to consider with the rate locked in, so any changes stemming from e.g. emergency budget could be avoided. Or at least talk to bank / broker and have everything ready to get an application through as soon as there's any noise about an interest rate announcement. You get a little time.

WifeMotherWorker · 02/09/2022 07:34

If your mortgage runs out in October you should be able to secure a new mortgage in principle on the current rates. Our mortgage runs out in January and yesterday we secured a new mortgage with Virgin before their rates went up again (due to happen today). Don’t wait until October to sort this out, there are plenty of brokers/financial advisors that are paid through commission that can help.

Mangledrake · 02/09/2022 07:36

Crossed over with @TuxedoJunction - there you go. Apply now, get the offer, and make sure it's frozen while you consider it, and you could avoid any downturn in October. You get a month at least. That's what I did in August and was unaffected by that rate rise.

TuxedoJunction · 02/09/2022 07:36

@WifeMotherWorker - I believe Op was referring to October 2023 when her fixed term ends, not this October…

Skade1810 · 02/09/2022 07:36

When does the fee decrease with your mortgage provider? We recently did ours and it was a 1% fee if within one year of the end of your fixed term. If you can hold out until 6 months before then you can lock in a rate and not pay any fee.
I agree the rates are going to rise over the next year though, who knows after that.

Original poster
Goldenbrowns · 02/09/2022 07:39

WifeMotherWorker · 02/09/2022 07:34

If your mortgage runs out in October you should be able to secure a new mortgage in principle on the current rates. Our mortgage runs out in January and yesterday we secured a new mortgage with Virgin before their rates went up again (due to happen today). Don’t wait until October to sort this out, there are plenty of brokers/financial advisors that are paid through commission that can help.

It’s October 2023
yes that’s definitely the fee-it’s based on a percentage of the balance
current rate is 1.93
and sorry-the best we can find now is 3.15, not 3.5
I’m going to phone am advisor today and see what they say-I just wanted to feel a bit more clued up myself

OP posts:
Mangledrake · 02/09/2022 07:41

If your deal runs out October 2023, apply now, agree deal, make sure it's frozen, and your redemption fee may fall before you have to accept that deal - may reduce with twelve months to go?

I know I may lose out if rates fall again, but I've paid for stability and peace of mind.

Original poster
Goldenbrowns · 02/09/2022 07:42

Mangledrake · 02/09/2022 07:41

If your deal runs out October 2023, apply now, agree deal, make sure it's frozen, and your redemption fee may fall before you have to accept that deal - may reduce with twelve months to go?

I know I may lose out if rates fall again, but I've paid for stability and peace of mind.

That’s what we were going to do in October this year but DH says they have removed that option?

OP posts:
HP87 · 02/09/2022 07:48

You need to get the mortgage agreed now. Mostly likely the early redemption charges with drop to 1% from Oct as you'll be within a year. So you can agree the rate now, then switch once its gone down. We agreed our mortgage rate in April but didn't switch until July, so the agreed rate does last a while.

Keep an eye on things like payback for getting a mortgage. We switched to lloyds and my husband opened a club lloyds account (a basic current account). They gave us £750 to switch our mortgage to them while being a club lloyds customer

Lunar270 · 02/09/2022 07:49

stairgates · 02/09/2022 07:27

Thats a high penalty, are you sure that hasn't decreased as your mortgage has gone along?

This.

Or, like my lender, they put me onto a favourable 5 year fixed rate, 2 months before my old fixed rate was due to end. This would solve your problems in one.

As others have suggested though, speak to a broker or I'd suggest speaking to your lender.

Lunar270 · 02/09/2022 07:50

Oops sorry, I misread October 22 not 23!

Sorryisjustaword · 02/09/2022 07:51

Agree a new Mortgage deal now, who knows what the interest rates will be by next October!

Original poster
Goldenbrowns · 02/09/2022 08:03

Sorryisjustaword · 02/09/2022 07:51

Agree a new Mortgage deal now, who knows what the interest rates will be by next October!

Can only get an agreement 90 days in advance. Things seem to be changing quite rapidly.
DH is now talking about paying the 4K off the mortgage instead and saving hard to bring the balance down over the next year.
These are the circles we’ve been going round in!

OP posts:
DashboardConfessional · 02/09/2022 08:05

Speak to a broker. I work in the industry alongside brokers and we have just done this - fixed at 2% in April for 10 years and paid a £2k fee. Now with rates over 3% to 4% - not sure I'd do it.

Original poster
Goldenbrowns · 02/09/2022 08:09

DashboardConfessional · 02/09/2022 08:05

Speak to a broker. I work in the industry alongside brokers and we have just done this - fixed at 2% in April for 10 years and paid a £2k fee. Now with rates over 3% to 4% - not sure I'd do it.

You wouldn’t fix?

OP posts:
pinkpirlie · 02/09/2022 08:15

We have just reserved a mortgage at 3.41% with zero fees. To start next March (must start the new rate by 31 March 23).
Redo your sums next year when you know where things are at.

DashboardConfessional · 02/09/2022 08:15

Goldenbrowns · 02/09/2022 08:09

You wouldn’t fix?

Show quote history

Depends how big the mortgage is but for a £4k fee plus maybe a £995 arrangement fee added to the loan, as many lenders charge - that's like adding £83 a month to your payment over a 5 year deal.

If your DH has worked out it'd save you more than that to fix and avoid a rate of 4% then it is maybe worth it.

Original poster
Goldenbrowns · 02/09/2022 08:27

DashboardConfessional · 02/09/2022 08:15

Depends how big the mortgage is but for a £4k fee plus maybe a £995 arrangement fee added to the loan, as many lenders charge - that's like adding £83 a month to your payment over a 5 year deal.

If your DH has worked out it'd save you more than that to fix and avoid a rate of 4% then it is maybe worth it.

Show quote history

But what if they’re up at crazy rates by next year? I hate this game!
I’ve booked appt with advisor this afternoon so will report back.

OP posts:
BarbaraofSeville · 02/09/2022 08:32

The calculator linked below might help, although it doesn't include a crystal ball to tell you what rates will be in 10 months time or over the next few years.

www.moneysavingexpert.com/mortgages/fixed-mortgage-calculator/

I'm thinking that mortgage rates might drop when we're in a deep recession because no-one can afford to do anything except the absolute essentials and all the pubs and restaurants go out of business anyway because they can't afford their own energy bills.