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When you approach the end of a fixed rate term, your lender will write out to you with the various options available. Typically, these will be a variable option and a few fixed options. Make sure you contact them and ask if there are any other options as they don’t always list them all. Just be careful about fixing for too long, as not only will it normally be higher for a longer fixed rate, butif you ever got in a position to pay off a lump sum, you could incur a penalty for breaking the fixed rate. (although Taylor is right that if you won’t be selling or moving mortgage, there’s less risk of incurring a penalty). Leaving aside trackers (that are effectively gone as an offering apart from the odd "ecb + 4%" which defeats the purpose) the main things to consider when choosing which option, is firstly the point above about whether you may wish to move house or pay off a lump sum. After that, there is an element of gamble. Some people would rather pay €100 euro per month more than the variable simply to be certain that for the fixed period, it won’t go up by €200 per month. Other’s will rather take the gamble and pay €100 per month less in the hope that any possible increases won’t be enough to lost out overall. If anybody wants to PM me details, I can gladly call you or email from the office during the week and explain in more detail. Regarding negative equity, as we stand (unless there is a radically new proposal from government or lenders!) you will not be able to move mortgage to another lender. Some lenders have even restricted their criteria to a 50% LTV (loan to value) ratio. This is why it is so important to fully consider the offerings from your existing lender when the fixed term expires. Hope this is of some help. Feel free to PM with any questions. Apart from general questions in open forum, your confidentiality is held paramount.
Hi is anyone comming to the end of their mortage term? We have been on a fixed rate for two years. The house is now in dire negative equity. I am just wondering what kind of reception we will get at the bank when it comes up for renewal. Cheers.
Polly. 😕I need to get mine fixed too…. just need to ring them, not sure what they are going to offer! Not looking forward to having to make contact, it wont be a great rate thats for sure!
we’re on variable now after being fixed for 4 yrs, its cheaper at the moment than what we were paying but the thoughts of the interest rates going up are pretty scary! might look into seeing if we can get a better deal wit another bank but as pollytart says, i dont know what the deal is with negative equity mortgages 🙁
im paying more as i had a dirty low rate… wont get a rate so low but looking to fix for about 5 or more years!!! (maybe 10 as we wont be selling up and want to ride the intrest rate storm out)
Thanks very much FC! That was very helpful. Is there any truth to the assertion that if you pay off your mortage weekly you can take two years of the term of the mortage?
Best Wishes,
Polly.YW Polly 😉
There’s an element of truth, but it depends on a few factors. Some lenders calculate interest daily and some monthly, you need to establish which way yours do. Also, some only allow monthly payments as it keeps their admin costs down. But in theory, if interest is calculated daily, and you can pay weekly, then you will have an interst calculation against a smaller (slightly!) capital balance which should mean more of the payment is going off the capital and not interest. In the early days, this will make less difference than if someone is nearer to the end of their mortgage term, but it can still make a difference. A bigger saving can be made in interest if you can afford to increase your monthly payments (and specify that you want the extra to go against the capital). I’ve had good success with people who reviewed their life and serious illness, made a saving and put it off the mortgage, therefore reducing the term and saving thousands in interest. Hope that helps 😉
Even when i was on a fixed rate i paid extra a month, it didnt go off the loan it went into a fund, when that reached the value of (i think) 2% of the loan value they would contact me and we could either take the money and spend it or put if off the loan amount….. not sure if we had to wait until we were between fixed terms but even when fixed they took the money iykwim
Yeah Taylor, some lenders do that as they treat paying off capital when on a fixed rate as if it would incur a penalty, so they wait until that fixed period ends, but some of them will allow you to increase and have the extra go straight off the capital,even on a fixed rate, but you need to tell them you want this. I’ve seen some people just increase their monthly payments without stating their intention and after a year or two find out that they are just "in credit" with their payments with no benefit to the balance!
Another thing to be careful of, some lenders have been contacting customers at various occasions and trying to persuade them to switch onto fixed or variable rates! This usually will not be in the customer’s best interest and cost them far more (particularly if it is a good tracker rate, e.g. ECB + 1%).
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