What will happen to mortgages

[NotKeenOnSwede]

Forgive me if this sounds a bit dense. I have a few talents but understanding how the world works financially is definitely not one of them and I know there are some intelligent people on here who may have an insight to this.

I took out my first mortgage last year, two year fixed rate. So next year just before the end of that period my mortgage broker will visit me and remortgage for a better deal. He said (at the time) my monthly payments will go down (I plan to overpay) because I'll be borrowing less and I'll be 2 years into the mortgage etc. Okay great.

But what will happen now because of everything going on? Are monthly payments likely to still go down or shoot sky high in interest rates if banks are going to end up in trouble financially? Any help explaining this would be appreciated!

If house prices fall then your loan to value will fall as well which will mean you will get a worse rate but as I understand alot of ltv's upto 60% rates are all low and almost the same because of what is going on at the moment, you will only have trouble if you go into negative equity and then be stuck on the lenders standard variable rate in which your mortgage payments will definitely go up.

Thanks. Anyone else?

No-one can tell you what the economy will look like in 2021. It could all be rosy or it could be disastrous. You’ll just have to get the best deal that you can at the time.

jimmyjammy001 you mean the LTV will increase

I've just remortgaged and went for a five year fix because of everything that is going on and interest rates being so ridiculously low.

I considered fixing for longer but then thought after five years my LTV should be in in the 60% bracket so even if interest rates have gone up I should be able to get a decent rate

I’ve just fixed for 2 years. With the current economy I don’t want to be tied in for 5 years. But I have a big mortgage!

We bought with a 100% mortgage in 2007 just before the market crashed. We were fixed for 2 years so when the 2 years were up, no lenders were offering 100% mortgages anymore and we were slightly in negative equity as the market was still lower than when we bought.

Our only option was to stay on our current lenders variable rate, which made our payments go up by around £250 per month.

It was really scary at the time, but we stuck it out and by the time we moved 8 years later we had a £90k deposit just down to the amount we'd paid off and the increase in the market. As long as you can ride it out the market will hopefully sort itself out.

Likely to remain very very low. Unemployment will be high, country in huge debt, austerity rules. BofE keeps interest rates as low as possible (zero?) plus some quant ease to try and stimulate a bit of demand in the economy.

You don't need a broker to get you a new deal though. We just call the mortgage company and ask what deals are available and usually they offer something very competitive, you just have to remember when to call. Takes half an hour and doesn't cost you anything.

My fixed rate is coming to an end this month and just changed to a 5 year fixed
Would rather know where I am with my mortgage payments with everything going on just now it’s one less thing to worry about

No advice, just keen to follow the thread

Can I ask .....I’m coming to the end of a deal soon. Would my existing lender just offer me some deals without the faff of P60s, bank statements etc? I’ve got a high credit score and I’ve been a good payer. LTV 28%. What’s the normal process? Never done this before! Thanks.

If you don't meet the criteria for anything better, otlr they simply CBA, they'll offer you a tracker mortgage, at best.

@patch - I had to provide payslips and they did a drive by valuation of my property when I remortgaged, even though I stayed with the same bank.

@Patch23042
Its depends on your lender.

Staying with your existing lender isnt always the best option.

I would always suggest speaking to a broker. They have access to a variety of rates, most of which are exclusive to brokers and are not available in branch.

In regards to having to provide proof of income, its driven by a number of factors. The amount of surplus income you have once all outgoings, mortgage and financial commitments like loans and credit cards is one of the main ones

To be a bit nitpicky, this isn’t strictly relevant or always desirable: He said my monthly payments will go down

Your monthly payments aren’t indicative of whether you got a good deal. It impacts how long it will take you to pay it off, the longer it takes, the more interest you pay. You will almost always be better off paying a higher monthly amount for a shorter duration then a smaller amount spread over many many years.

So don’t get distracted by the smaller monthly amount. Look at all the things already mentioned instead.

my mortgage broker will visit me and remortgage for a better deal

Whatever deal you get through this broker, don't forget that it will include a contribution to his living. If he is prepared to visit you, that to me is a clue that he is making a good living from it.

Just before he's due to visit you, ring the mortgage provider and ask them what they can offer you. Ring around some others too.

Then, you h e something to compare to what he offers.

He might make a better offer, but it's good to know how competitive his offers really are.

@Patch23042 we haven't ever been asked for income information etc as if it's your current lender it isn't a remortgage it's just moving your existing mortgage to a better deal. We have done this every 2/3/5 years since we moved in 15 years ago.

Does anyone know how long the mortgage holiday lasts, is the offer only open until the end of 2020? Is it only for 3 months or will they extend it for longer depending how long this goes on for?

Just before he's due to visit you, ring the mortgage provider and ask them what they can offer you. Ring around some others too

Direct deals are often worse than brokers can get. If the broker does the work and chasing then the provider doesn’t need expensive call centres etc. Someone has to do this work as it’s regulated, it’s not necessarily cheaper to go direct as big businesses are often more costly.

it’s not necessarily cheaper to go direct

And you will only know this if you have done some research.

Is it really bad to be on the SVR right now?