Mortgage - What Happens Later?

[RubyHeart]

I feel like this is a really stupid question so I apologise in advance if so.

My DH and I are one year into our mortgage. It is a 2 year fixed. Our circumstances have changed since securing our mortgage in that we had one DD already but have found out I'm pregnant again. Basically with the costs of childcare it will not be viable for me to go back to work and so we will be relying on only my DH's salary.

What will happen to our mortgage when the fixed rate ends? I worry as with only one salary we won't meet the affordability level for the mortgage we already have (but we can afford it per month easily if that makes sense).

Any help gratefully received and again, apologies for being dense.

Without knowing what the two year deal sets out...? Does it say you go back on the variable rate?

Sorry. It will drop to variable unless we get a new deal.

Probably you won't be able to get a new deal as you won't meet the affordibility, so will have to stay with your current mortgage. What's the variable rate at the moment? Will that still be OK?

Ring up your mortgage provider and ask if they are willing to make an offer, saying you want to know their option before you go to the market. I did this last year and got a good rate with no paperwork required! All in one phone call.

Mortgage details say that we have a fixed rate of 3.89% which will then drop to variable at 3.74% when the fixed term ends.

Generally you don’t need to prove affordability to go on to a new deal.
Who is your lender?

Lender is Nationwide.
Thanks for the help so far.

Could you overpay this year so that when the deal ends you owe a bit less money? On my mortgage if I overpay by £50 a month I should be paid off a year early and if I overpay by £100 it would be 2 years early.
But another attractive thing about overpaying is owing less when it comes to remortgage. My income has gone down a bit since we bought the house.

Then you definatley don’t need to have affordability checks at all to go on to a new deal. In fact you can do it on line in a few mins.
This is 100% accurate as I work for nationwide as a mortgage adviser.

Agree, usually you can negotiate a new fixed deal with current lender without going through affordability again.

If you want some impartial advice call London and Country mortgage brokers, they are free and will be able to give you all the options.

Thanks so much again for all of your help. I am just trying to get all our finances in order and make sure I understand all the ins and outs.
Will try and get some overpayments in for sure 🙂

We've just had the same with Santander. We were offered a choice of 6 deals online (for same amount and length remaining).

As long as we didn't change the details there were no affordability checks, etc.
Nationwide might do something similar?

We had our mortgages with Nationwide. As they came up nationwide contacted us. I looked on line at the best deals and applied online. Paperwork arrived. No questions at all. We stuck with them becausr of this and they also had the best rates.

Definitely no affordability check it’s really easy to get another deal.

We are with nationwide. When your fixed rate ends you’ll get a letter saying what your new payment will be and the current rate - you’ll also get an invitation to ring up to secure a new fixed rate deal. That’s what we did and we were able to secure another fixed rate for 5 years, saving lots.

Thats pretty good your rate lowers at the end of your deal, usually it's the other way about.

Have you made a dent in your mortgage? The wider the gap between loan to value (LtV) the better the deal e.g. 10% LtV might have interest rate of 3.90 but 15% LTV rate is 1.9 which could save you £100+ per month depending on the size of your mortgage.

Speak to a mortgage broker. The one I use is free and they are privy to better deals although it'll still be worth shopping about.

I went with a building society for my current mortgage, the amount they would lend me is less than current mortgage so I had to add money to it. However, by paying the difference, the monthly payment has dropped by £120 pm and over the full term of the mortgage I'm saving over £12K in interest by doing so.

Something I wish I had known the year before re-mortgaging would have been not to take finance out on big expenses as these are all calculated in affordability checks.

Our bank don't do affordability checks if you switch to a deal with them.

Mind at rest. Thanks so much all 🙂