Has your mortgage gone up?

[AllanyonetalksaboutisHandM]

I’m abroad, ours went up by around €50 last month, just received an email and January’s mortgage payment is almost €200 higher 😔can’t afford all this, with electricity and petrol too, how long is this due to continue?

We switched fix in June, which will come into effect in Jan. It will be about £50 more than previous.

“I’m embarrassed to say I don’t know much about mortgages etc”

Now is the time to find out 😉
If you speak Portuguese then look at local sites for basic guides. If you don’t, then read about U.K. mortgages. The basics are similar from a quick google: repayment with interest rate based on an underlying rate, fixes available for different periods… getting your head around U.K. mortgages will give you a head start talking to Santander in Portugal.

@Testina I have a basic knowledge, but I suppose we’ve been lucky in that our mortgage has come down and has been the same payment for years now, so I’ve never had to really think about it.
Are fixed rates generally a lot higher? I’m worried that it’s already up by €200 and how much it will go up by, I don’t like the unpredictability, fixed sounds ideal but obviously the catch must be that it’s much more? I’m wondering why we didn’t go fixed in the first place 🤔

Yup.

“Are fixed rates generally a lot higher?”

The best way to answer this is to look on websites for Portuguese banks, with your personal information. We don’t know if you have residency, what your LTV is, if you’re locked into your current product…

Generally, yes - fixing is higher than variable. And the longer you fix for the higher the rate is. But it’s not crazy higher than variable, and the difference between a 2 and 5 year fix isn’t always that much.

Another thing to watch is that you may pay a higher product fee to fix - which if added to the mortgage costs you more again because you’re paying interest on the fee for years. That’s common in the U.K., but you need to check for Portugal.

This site comment is from Oct 2022, and shows not a % huge difference between variable and fixed - though can be a lot in actual money on a bigger mortgage.

another rate rise was announced in the uk today so yes op it will likely go up in Portugal too.

it’s marginally more for a fixed rate yes, but it’s the bank gambling on rate movements, not you. With a variable rate you have said the risk is yours and you will pay less if it goes down and more if it goes up,

which is a good decision if you’re comfortable in the economy and also can afford the increases, ie you can afford to loose and pay increased rates, if you can’t then it’s a bad gamble. No one should bet what they can’t afford to loose.

I think you need to speak to your mortgage provider asap , as you are now in a very difficult situation , most folks fixed when it was announced that rates would go up everywhere. But now they are going up you either commit to a prolonged period of increased costs or ride it out and hope it doesn’t go to high and stay that way for too long.

Googling, it looks like fixed is a more common choice in the U.K. - even before current issues! - and that Portuguese lenders offer fixes with higher deposits / equity than U.K.

I think most want bigger deposits. Pretty sure the 5% here was pretty unique.
Afaik 20% is most common in Europe

A friend posted this to Facebook earlier. It's frightening

I know another friend has been told her rent will be increasing by a third in the new year at as the landlord need to keep up with expenses

@nomoneyno So what happens if you can’t pay it?

@nomoneyno did they post any details with that?
£200K over 25 years @ 1% = £753
Whack that up to 6% and it’s still “only”£1289
Obviously there’s all sorts of possibly loans and durations and interest rates!
But that sounds like maybe something extra, like coming off IO too?

There is so. Much. Misinformation.

They might let people extend their term if they've not already stretched up to age 70-80. The incentive to pay it as opposed to not (e.g. mortgage holiday or term extension) is that you'll pay less interest over the term.

Ultimately, repossession.

That’s not always the best thing for the bank - behind the scenes pressure on policy from government, PR, poor return selling repossessions, more money to be made playing the long game getting more interest from that owner underpaying for a time until the economy recovers…

In the short term, a common action might be for the borrower to remortgage with a fix over a longer period, so they know they can afford the payment - and just take longer to pay it off.

If you’re 10 years into your 30 year mortgage, and owe £200K at 2% now, that’s £1012 a month and £243K to pay.

Extend your £200K back up to 30 years fixing at 4.5% for 5 years (possible now) and that’s almost the same monthly repayment, but you’ll now pay off £365K. (assuming 4.5% forever)

See why the bank might allow that?!

@DashboardConfessional “They might let people extend their term if they've not already stretched up to age 70-80”

This is the kicker, isn’t it? 😔
I’d guess the more likely you are to not be able to absorb a rise, the more likely you are to have got a mortgage later in life (so 30 years already takes you to an older age) and to have taken it out over a longer period in the first place. And by being a recent borrower, you won’t have banked any years of payment.

My previous example - of extending 20 years remaining back up to 30 - only works if you bought 10 years ago. In which case your mortgage is probably lower (house prices) in the first place, so you possibly have more potential to absorb the rise.

@Testina We bought 12 years ago

Then don’t panic, go and speak to your bank and find out your options.
If you really can’t afford the increase (or couldn’t afford much more) you could look at fixing now, possibly with a remortgage over a longer term. Ride out the next 5 years with a longer term plan to put all your extra money from full time work into the mortgage when your kids are in school.
Knowledge is power. There are always more options when you get the knowledge 👍🏻

Yes mortgage rates will get higher and higher for a while. Certainly into next year.

Ours is fixed but due for renewal in March. Ours is only going up by £70 a month.

Thankfully no, I’m half way through a 10 year fixed rate ( and thanking my lucky stars).

We fixed in March at 2% for 10 years and feel the same!

Just started a 10 year fix. We got the offer when the rates started to go up, 3.34%, felt a better option than variable rates knowing they might go up to 5-6%.

Sorry to hear that. It's really shit. Hope you can work something out.

Im a renter and I welcome house price falls, but it is shit when it is at the expensive of other people. There has to be a better way than what we have already. I worry about people I know who have bought a home in the last few years.

£500 increase as of 1 April when our current very low fixed ends. I've taken gamble and gone onto nationwide tracker (0.49% above base rate). Fixed rate options were 2yr at 4.99% so I've got 2 more 0.5% increases before praying! No scope to increase term either.

Ours is £450 a month more (2 year fixed)...starting in Feb. A ridiculous amount.