mortgage advice

we got a mortgage in June. Property was valued at £160k; we paid £155k.

We stupidly (?) chose a variable rate mortgage. Now we wish to get a fixed rate to buffer us from interest rate hikes... the surveyor just came round and I couldn't bullshit him about the things we were meant to tackle based on the June surveyor report.. but he said he wouldn't mention them (we got talking and he seemed friendly and helpful).. he did say though that the value hasn't increased.. does this mean we won't be able to re-mortgage? Should the property be worth more than it was in June for us not to have to pay thousands? I am so confused as to how it all works.. really stressing now.. things are very tight.. if it's worth the same as in June and they think the problems have been sorted - should we be ok to just switch to a fixed rate without paying lots of money?

What a confusing business. ANy insight appreciated; otherwise just let the post fall. I am so stressed I need a beer.

 

IMO I think you're better off with a variable rate mortgage. I've never had anything else.

The likelihood of interest rates really going very high in the near to medium future are very small and in the meantime you should be doing better because your variable rate should currently be lower than any fixed rate you're offered.

Banks aren't a charity and they'll set the rates for fixed rate mortages at a level where they think they'll make money in the long run.

If I were you I'd stick with variable rate.

Michael.

 

It's all such a headache and a worry..

I just hope the rates don't rise much... it concerns me when the government and banks keeps mentioning reigning in borrowing.. Just don't know what to expect. Don't want to lose this home.. and would be nice to have spare cash to do the place up...

I'll just go with the flow and see what happens. The surveyor said that there might be a price drop soon.. which would make me negative equity.. this scares me stupid.. but many analysts predict that properties will continue to increase in value in my area....

I think I better stop thinking about it all before my brain explodes.

 

My parents where forced to remortage their house and they still have another 15 years to go before it all paid of. The problem is my dad dosn't exactly earn a fortune so if interest rates go up my parents will have no extra money to cover the mortage increases. Esepcialy with the car going wrong every other day and general building work that needs doing on the house.

Fortuninity they decided to pay a little bit extra and buy a house back then an average area. (this was 1980). What has happened now in Manchester is a huge north/south divide. Luckily my parents moved to South Manchester and the property prices are increases 25% each year here. I think my parents house would be worth around £180,000 now because it needs some work doing to it (the celing price seems to be around £230k).

The problem is though I am totaly priced out of my local area, to afford any where round here I would need to earn £60k a year and thats just not going to happen.

So just be careful it can be quite risky, my parents though they would eaisly be able to pay for mortage but some times circumstances happen that you just can't avoid.

Anyway good luck with it.

 

Anna

Fixed rate mortgages are generally expensive. They allow you to pre budget but they are generally linked to redemption fees and tend to charge top rate.

Your best bet certainly for the next six months is to go on a tracker mortgage. I pay base rate + 0.39%.

Interest rates are likely to go down again because inflation is low and staying low. Therefore fixing now would be most unwise.

Regards

Mick

 

Mick - allthough there's no way you could have known, just an FYI..."Anna K"s name is actually Gary Allthough he might enjoy you calling him Anna

Michael.

 

Mick, I am surprised that a man of your considerable means still has a mortgage! I'd have thought you would have got rid of that a long time ago!

Good advice on the tracker mortage though. When were remortgaging, a tracker was something we seriously considered before we ended up taking out a current account mortgage.

 

Hi Gary,

Mortgages can be a minefield. Michael is mainly right about fixed mortgages being more costly. Fixed mortgages are good if you want a set figure each month to pay. Good for working your monthly budgeting. If the interest rate shot up then they can be ideal.

I do think interest rates will go up but I have not idea by what amount. What you could look at is a discount mortgage. These offer a percentage below of the normal rate. This may be 1% to 2% cheaper over a period of time. This period may be 1 to 5 years.

Tracker mortgages are worth looking at. These are based around the bank of england base rate + a fraction of a percent

What you need to do is find out if your mortgage lender has any deals on. You may be able to get a better deal without moving lenders and it may cost you nothing. I have done this a few times with my mortgage lender.

Also check with other mortgage lenders for better deals.

As your mortgage has only been going for a few months, you need to read the same print to see if there are any additional fees for changing mortgages.

Another thing you could do is make the period of the mortgage over a longer period. This would knock down your monthly payments and make things that bit easier. But you end up paying more over the long run.

I do feel for people who have just got mortgages recently. My mortgage is only £30,000 (I live in the South Yorkshire) & I bought my current house in 1989. In that time interests have gone up then down.

I hope all this helps.

SCIDB

 

I think all estate agent branches have a mortgage advisor hovering about. They give free advice because they get paid commission when you sign up with the building society. If the bank rates have gone up, then the fixed rates on offer today are going to be higher, as other have said.

Consider renting a room for a few years to help with the mortgage? If you do need to change mortgage, tell the advisor that you might want to rent a room out, so he can choose an agreeable lender.

 

Robbo

I own 3 houses. There is no mortgage on the house that I live in.

It is tax efficient to have a mortgage on the two rented properties because I get tax relief of 40% on the interest, thereby increasing my profits. Also I can offset the mortgage from any capital gains liabilities, thereby reducing the tax bill.

Regards

Mick

 

Re: Robbo

WTF?? I thought that not only was tax relief on mortgage interest capped at the lower income tax rate (22% or whatever it is now) - regardless of what you earn and then it only applies to the first £30K of any mortgage and finally that you were only eligilble for it on your "main residence" and not properties you rent out.

The rules certainly seem to have changed considerably since I had a mortgage in the UK (and rented out property there).

Michael.

 

Switch to a repayment mortgage..(if you haven't already).. endowments are a not financialy viable.. they are far too expensive. Other forms of "investments" that you'll require with an interest only mortgage are also too expensive.. it's a double edged sword.. when rates are low.. you get a good mortgage rate but returns on investments are poor..

I don't understand why you're thinking about remortgaging??

Surely what you should be looking in to is switching your mortgage provider.


GTM

 

Michael

Tax relief has always been allowed on the interest paid on rented property because it is classified as a business expense.

Regards

Mick