Financial wizards, little help please

Shit man, sorry to hear that :frowning:

The below might be teaching you to suck eggs, but could be of use to you and/or others?

Have you signed on for Job Seekers Allowance, or Employment Seekers Allowance?
That should help a little bit, at £316.77 per month.

Take a look at this, to see what you might be entitled to:

https://www.betteroffcalculator.co.uk/calculator/new/step1

(Things such as council tax relief, etc, which is the bill you need to pay first, as it’s the only one you can be imprisoned for not paying)

Keep calm - the last thing a bank wants to do is to repossess a property.
This is always a “last resort” measure.
Usually, in terms in financial difficulty, a lender may offer the option to switch to interest only repayments for 9 months (39 weeks), after which time SMI kicks in (Support for Mortgage Interest)

Also, talk to any other credit providers you might have and let them know of your situation.
They are duty bound to help you out.

This is a decent site, with some good links about other situations on the left hand side:

6 Likes

I guess I could apply for a mortgage holiday but thankfully, I’m pretty liquid, so would just be delaying paying the thing out really. I am going to back down to minimum payment and see how it shakes out mid to end of year. (thanks all for that advice).

Regards JSA, I will be applying post March 31st. I know we don’t get any other benefits, we never have due to savings, but the last time I applied, JSA was not means tested and importantly, it counts as a NI contribution.

1 Like

Yep, hope you get sorted Clive, and anyone else.

1 Like

Great post @Poet

1 Like

moving on from @Jgavand @iwaters notes on the C19 thread.

I am no financial expert … far from it! So if the BoE base rate is now that low, what wil that mean in terms of the interest rates mortgage companies will offer. Will they naturally follow the drop, or do they all start getting jittery and hold/increase to protect themselves?

My fixed rate ends in August i think. Assuming this is still held low … is that basically the ideal opportunity to go for a 5year fixed at a crazy low rate? Appreciate i’m over simplifying this!

Mortage fixed rates are not just a simple percentage uplift on current base rates, but factor in, amongst other things, what the lender thinks their borrowing rates will do over the coming years, and what actual hedging they can do to create certainty.

In the current market, there’s a LOT of risk and uncertainty, and so I wouldn’t anticipate fixed rate deals being that great until things calm down a bit… as ever, the markets can be unpredictable though!

(I’ll caveat all that by saying i’m no expert either!)

I just checked with our provider. The fixed rates are already pretty low. 1.5% for a 5 year fix, 1.2% for 2 year.

I cant see them dropping much more off that.

Fair enough, cheers both.

Still may make sense to go long term on those types of rates. Now i think of it, we had pretty decent rates this time around. But we borrowed a lump to do our extension, so needed the shorter term one to then get the revaluation etc. Hopefully LTV will be a bit more positive now with the work we’ve had done, coupled with these rates (if they stay that way) then maybe a 5yr will be what’s coming up next for me. Ubless as @magnacarter says, the lenders get twitchy over this little current issue, and start slapping the rates upwards!

Yeah we really in the territory of the only way rates can go is UP. The economy is going to take a spanking and lots of people un employed not able to pay their mortgage. I am not an expert either but I am certainly going to lock in a good rate for a good few years while I can

1 Like

Nationwide have a 2 year base rate + 0.84% tracker. As of today, that is seriously cheap.

If you look at 10 year fixes, the rates are pretty high (2.5% ish) when compared to 5 years fixes (1.5%). We’ve seen interest rates recover very slowly from the previous recession and so my thinking is that long fixes aren’t good value. 2 year is cheap, 5 year gives a decent cushion and time to prep for a rate rise. It all depends what you’re personal finances are like and what you personally want.

2 Likes

There’ll be a distinct lack of options for >=90% LTV people, as the risk has just jumped massively.

The market will contract (unless Sunak changes Stamp Duty?) as the recession takes hold and many, many people will be left in negative equity (2/5 houses sold in Northern Ireland since 2008 are in an average of £68k of negative equity) making it nigh-on impossible for them to remortgage.

The Government won’t want this, as they will need people to spend to beat the recession, so (IMO) affordability rules will be relaxed for “mortgage prisoners” (not home movers) to enable people to stay in their houses. In order to do this, money will need to be made available, cheaply, on the markets.

So maybe those >=90% LTV mortgages will be there, just with 20% underwritten by Government, as is the case for some people in Northern Ireland.

Following the 2008 crash (and this is far, far worse), rates stayed at 0.5% until mid-2016, when they dropped further, to 0.25%.
They increased to 0.5% in 2017, where they remained for a while, before going up to 0.75%, as the economy started to show real signs of improvement.

You won’t see much movement in 2 year fixes, maybe an increase in product fees, lack of availability in products without fees.

The movement will be in 3 to 5 year fixes, they’ll be about the same as where they are now, perhaps slightly lower, with options for fees, or no fees.
Banks will want to get the revenue from a longer term and to feel safe that you’re not going to default.

Current Rates
An average 5 years fixed on 80% LTV is about 0.99% above the Base Rate, of 0.75%.
I cannot foresee it dropping to 1.09% for an 80% LTV 5 year fixed, with the new rate of 0.1%.

People on a discounted tracker will be loving it.

@gingerbongo - You’ve made a hedge there with your extension, based on market conditions at the time.
Now those market conditions have changed, I hope the value of your home hasn’t fallen, making the LTV the same it was before you had the extension done :frowning:

1 Like

Well, yeah that’s always a risk. But it was calculated on the fact that we couldn’t afford to move, at least not to somewhere that we would actually want to live, and upgrade on what we have already (outside space being the major component for us). So regardless of the value change to our property, the extension has bought us 5-10 years more of living here. More at a push. Without it, the family would be too big in 1-2 years time, there just wasn’t any space. So even if it’s ‘cost’ us long term. It served a purpose and we’ll get to enjoy it. What happens in 7+ years, i have no idea!

1 Like

FTFY :wink:

2 Likes

A house as a home first and an asset 2nd. Who’d of thunk it!

1 Like

The problem with going for short term fixes is that you keep having to remortgage otherwise you go up to SVR, and in remortgaging, you lose all the benefit in product fees. I did the maths last time, and it was a waste of time. Maybe if you can fix for 5+ years as you say, but I wanted mortgage flexibility as I knew it was likely I’d want to move at relatively short notice (which was now - those plans are clearly on hold!!). So wanted something with no ERC’s.

I went with a lifetime variable with Coventry called Flexx for Term which is technically not a tracker but had always done so. Started at 1.65% when I took it out, and with the two rate rises now stands at 2.15%. Over the life of that mortgage which is now a number of years, I’m up on taking out fixes and having to remortgage with product fees.

The big question is whether they do actually stick to their promises, which they are not legally obliged to, and follow the base rate cuts. They were still in a holding pattern saying “we are reviewing our product ranges and will notify customers in due course” after the first rate cut, so whilst I’m still optimistic, I am a little worried the current macros situation will lead them to just accept pissing people off and hold rates as they are on this product. Which would be rather annoying, but not the end of the world. I have savings with them as well though, so if they cut those and not mortgages, I’ll definitely call them out on it.

I’m still better off than I would have been by going with any other product on the market at the time I remortgaged. True base rate trackers were all for a fixed period of time, and so I’d have had to incur product fees before now. So I can’t be too annoyed with my decision.

EDIT - just found on twitter they have confirmed they aren’t changing mine. Will have to reconsider what I do now. Especially if the market rates all fall markedly. If they had followed suit, I’d have been down at 1.5% which would have been fine, but 2.15% now seems excessive.

1 Like

You don’t have to take a product with a fee.

for a two year fixed, for example;

2.14% without a fee
OR
1.99% with a fee of £495
OR
1.84% with a fee of £999

(All have 2% ERCs, so don’t suit you)

The “tipping point” comes with how much you’re borrowing and over what term (as well as your risk appetite for a two year product)
People are obsessed with that rate, when they may pay less over the fixed period with a higher rate and by not paying a fee (especially when the VAST majority simply add the fee to the loan anyhow :see_no_evil:)

But that’s a false economy. Maybe it works on non-London mortgages, but at mortgage values on just a London flat, you are way worse off with those higher rates for not paying a fee

Like I said, depends on term and LTV.
But yes, as the mortgage amount increases (London or Cheshire Golden Triangle :wink:, or Sandbanks, etc) it’s most of the time better to pay a fee.

IN OTHER NEWS.
28 minutes on hold to my mortgage company for a redemption figure :sob::microbe::mask::syringe:

A quick search right now yields HSBC with 0.74% (base + 0.64%) for 2 years, for a £999 fee and no ERC.

A quick look at the MSE mortgage comparison chart, and over 2 years, the current mortgage would have cost me about £24k whilst the HSBC one would have cost me £21k, including the fees. Remaining debt is lower under the HSBC option (after adding fees to the mortgage) by about £1400 too. So I’d have paid less, and yet paid off more. That’s also true, just about, after only 1 year, so even if this does turn around fairly fast (which in all likelihood I’m not expecting), then I won’t have lost out.

Looking like a switch is the way to go. Unsurprising when you’re comparing a 0.74% rate to 2.15%!

1 Like

JESUS!
What LTV is that for <60% and Platinum customers?