6.69% 5 year fix

[CPHB2021]

Hi all! I am so very confused and stressed. We have a shared ownership property and currently the lowest rate we've been offered is 6.69 for 5 years. We are absolutely gutted as we ideally would have moved before 5 years is up but now, if we dig this offer, it will be £15k ERC, which is not possible.

Would you go with this or go on to SVR in the hope things go down again soon?

Mortgage term expires in December.

Thank you!

What's your SVR currently and how much more of a base rate increase could you afford?

Have you looked at trackers? Read today the HSBC have one at .69% above base rate. At least you're not tied on and I don't think base rate will go up much more.

Because we are shared ownership it's really limited on who will lend to us x

What is the SVR? SVR where I am isn't much more than that so would be worth hanging on. Indication today seemed to be that base rate wouldn't increase loads more, what trackers do they have?

How stressful for you. It's so awful at the moment.

God no! As pp says what is the SVR with your bank? Going on SVR for a shirt term gives you opportunity to fix on a better rate hopefully sometime late next year. 2yr tracker could also be better

Is the 5 year fixed rate not portable should you move sooner? Our fixed rate isn’t up till 2027 and we have just bought somewhere else, took that rate and then new rate for the remaining. That is if we ever get to actually move…

We have been advised to stay with our current lender as my husband had recently gone self employed ( there is more money and minimal risk moving from being employed ) so we're really inner a rock and a hard place.
The SVR is 4.9% above BOE, the adviser says, so 7.9% I guess!

That quite high, but yes you prob won't be able to remortgage until he has enough accounts.

So your choices are a SVR of 7.9% or a fix of 6.69%? What sort of timescales are you looking to move on, with the SVR being higher if it's not imminently the fixed deal looks more and more attractive?

Does the ERC reduce over the 5 years, or is it flat?

Keep in mind if you’re considering a variable or tracker that the markets are costing in a base rate of 5.5% by July 2023

Sorry, maybe super tired, but what does 'costing in a base rate' mean? This is the prediction of what it will be by July next year? Gosh it's all SO scary and unpredictable!

Which lender are you with?

Kent reliance. Again, one of the only lenders that would lend to shared ownership at the time x

This is completely unhelpful so sorry about this but this is why I would never advise someone to buy a shared ownership

Thanks 😂 it was renting or SO, so we went with SO. It's served us well so far but now we are in a comfortable place financially, completed our family, paid off all consumer debt we were hoping to sell and buy a 'normal' house but it seems that is getting further out of reach!

Yes sorry, its not a criticism its more that Im amazed that these schemes are allowed when they're so restricted and limit people so much, both in terms of lending and who they can sell onto

What about metro bank?

Can you get a 2 or 3 year fix? That might give you more options to move sooner while not risking the base rate going even higher on your SVR.

If it was 2 year, I'd jump. This is the only offer they have for us at the moment.

Which mortgage broker are you using?

It is a horrible time for everyone. It might be worth your partner considering not bring self employed for a while. This would bring you a degree of financial certainty maybe

I wouldn’t take a 6.7% rate unless I had no alternative. I think it’s very likely that rates will fall below that for a lot of the next five years. BoE is now indicating that the base rate won’t increase much further but the mortgage market is still priced with the expectation that rates will significantly increase. Of course that could all change and no one has a crystal ball so there’s a risk.

Is there an option for you to switch to a tracker product with the same lender? Usually cheaper than SVR but you are locked in for a certain period.

You can usually apply for a mortgage offer and hold it for up to 6 months without committing so you might want to do that. Even in a few months time we may have a better idea of what’s happening with the economy.

If it’s so hard to get a mortgage on shared ownership you might want to consider moving once your partner has sufficient accounts? It might be comparable in cost month to month even if not shared ownership as you should have a better choice of mortgage.

This 100%, shared ownership just enabled people to borrow more and push up house prices even more, especially for shared ownership houses and like the problem the OP is facing now, only a few mortgage lenders will touch them as they are generally overpriced and very complex to deal with, but that's the risk you take with taking on a shared ownership property unfortunately, people are desperate and will take out these mortgages

Try a broker. They were able to give us deals that we couldn't find elsewhere. Some lenders wouldn't lend us even £1 due to being self-employed! Yet our employees could get big mortgages 🤷‍♀️

Mortgages are priced at the expectation base rate will reach 5.5% but the bank of england have indicated that isn't likely, so in theory the rates should start to reduce as the expectation of what might happen with base rate fall. Andrew Bailey yesterday said he expects fixed mortgage rates to fall.