Mortgage - renew early before wife goes on maternity?

[Ynox]

Hi all,

I've got a mortgage which is due to renew next summer. ERC on it is roughly £4k.

I've recently found out that my wife is pregnant with our first child, due end of January.

What's the best way to play this? Renew early? I'd be happy to pay the ERC if it was the best approach as the SVR is kind of crap with our current lender. I'm a little concerned that I'll be renewing the mortgage just as we have a child and my wife goes on maternity - the due date is > 6 months before the end of the fixed term!

Cheers!

[Sarnie]

If you have your Wife's return to work details when you apply then you will be able to use her income, depending on the lender.

[Ynox]

Sarnie said:

If you have your Wife's return to work details when you apply then you will be able to use her income, depending on the lender.

Thanks Sarnie. My wife is worried about affordability if we have a grand or so of childcare each month once she returns to work. This is still affordable based on our income (we'd still have some spare cash each month), and we do have savings which could cover it outright if required.

Bit of a crystal ball, but if it was going to be another 5 year fix, I'd guess the risk of the interest rate going up before renewal time (guess Q1 next year based on July end of term) is still lower than renewing this summer and paying the ERC?

[Sarnie]

Ynox said:

Thanks Sarnie. My wife is worried about affordability if we have a grand or so of childcare each month once she returns to work. This is still affordable based on our income (we'd still have some spare cash each month), and we do have savings which could cover it outright if required.

Bit of a crystal ball, but if it was going to be another 5 year fix, I'd guess the risk of the interest rate going up before renewal time (guess Q1 next year based on July end of term) is still lower than renewing this summer and paying the ERC?

I'd be extremely surprised if rates were to go up enough between now and January to warrant paying a £4k ERC now.

But I can't comment on your affordability without being party to all of the required info to work that out.....

[Ynox]

Thanks Sarnie - I'll be in touch closer to the time. Appreciate your help!

[Phateuk]

Interesting RE childcare - I have a similar question probably not worth it's own thread.

Our first is due in November, mortgage deal ends in June. Wife will still be on maternity at time of renewal, does the lender require detail about future plans such as number of day wife will work, childcare? I imagine at the time of application we will not know these, potential "free" grandparent care etc.

I had previously (perhaps naively) assumed it was all based on situation at time of application.

[Sarnie]

Phateuk said:

does the lender require detail about future plans such as number of day wife will work, childcare?

Yes they will.

[zedx19]

Your current lender will offer you a new fixed term rate (if that's what you want), which will probably be an ok deal. They will not carry out any affordability checks if you are moving deal without taking any extra borrowing. In your situation, it would make sense to choose one of the deals your existing lender can offer you.

[Phateuk]

zedx19 said:

Your current lender will offer you a new fixed term rate (if that's what you want), which will probably be an ok deal. They will not carry out any affordability checks if you are moving deal without taking any extra borrowing. In your situation, it would make sense to choose one of the deals your existing lender can offer you.

Ok thanks for the info.

Interesting about no affordability check - that wouldn't be a worry as we're pretty comfortable here right now but would expect some sort of checks.

[B9]

Sarnie said:

Yes they will.

Most people may have an idea, but not a solid one until nearer the time they return to work. Some employers, for example, may say the existing role isn't available part-time. You may need to reconsider nearer the end of maternity whether you want to return full-time, part time, change roles etc?

If you had lots of viable ideas, such as below, what do you say to the bank?

1) Return full time, parents will cover childcare
2) Return full time, pay for childcare
3) Return part time, parents will cover childcare
4) Return part time, pay for childcare

Only the borrowers at this point actually know, and surely you can't be held liable if your plans change in the future?

Phateuk said:

zedx19 said:

Your current lender will offer you a new fixed term rate (if that's what you want), which will probably be an ok deal. They will not carry out any affordability checks if you are moving deal without taking any extra borrowing. In your situation, it would make sense to choose one of the deals your existing lender can offer you.

Ok thanks for the info.

Interesting about no affordability check - that wouldn't be a worry as we're pretty comfortable here right now but would expect some sort of checks.

Can confirm this was Santander's approach when it came to our first renewal. I'm sure it was a few clicks on their website. No input of salary etc. Not the best rate but suited us at the time.

[zedx19]

Your current lender won't carry out any checks providing you don't want extra borrowing or change the term. I've literally just done this with Virgin Money, term ends September. They offered me a 2, 3 and 5 year fixed rate option with favourable rates (1.8% from memory). They've asked for no information whatsoever, just send out a letter with the offer, you sign and send back.