What happens at the end of a fixed rate mortgage?
Discussion
Hello,
I wonder if I can pull on the experience and knowledge of PH!
It's not an issue yet but I took out my a 5 year fixed rate mortgage 2 years ago, so still have 3 years remaining. I'm happy with the rate and monthly amount.
What actually happens after the fixed rate runs out? Looking at my paperwork the bank says I'll then go onto their standard variable rate, but what if I want another fixed rate?
Do I need to reapply?
More importantly, will I be credit checked by them? Or be finance checked? (I ask as I would like to buy a brand new car soon (Well, a lease deal actually!) so that means I would still have the montly payment at the time of getting a new mortgage - would that affect things?
Would I be charged an arrangement fee?
Is it just a case of ringing them near the end of the fixed rate deal and asking what my options are?
Sorry for all the questions!
Thanks in advance for anyone taking the time to reply.
Cheers!
I wonder if I can pull on the experience and knowledge of PH!
It's not an issue yet but I took out my a 5 year fixed rate mortgage 2 years ago, so still have 3 years remaining. I'm happy with the rate and monthly amount.
What actually happens after the fixed rate runs out? Looking at my paperwork the bank says I'll then go onto their standard variable rate, but what if I want another fixed rate?
Do I need to reapply?
More importantly, will I be credit checked by them? Or be finance checked? (I ask as I would like to buy a brand new car soon (Well, a lease deal actually!) so that means I would still have the montly payment at the time of getting a new mortgage - would that affect things?
Would I be charged an arrangement fee?
Is it just a case of ringing them near the end of the fixed rate deal and asking what my options are?
Sorry for all the questions!
Thanks in advance for anyone taking the time to reply.
Cheers!
If you want another deal you'll have to apply for a new mortgage, as you would if you went with another lender, you will stay on their rate until you move.
Most new mortgages have a fee, £99 up to £1500 for five year fixed at 2.39% for example. The better the deal the more expensive it is, so it would seem to me anyway.
I'm pretty sure credit checks will appear on your rating but I doubt it'd make much impact unless you're a risk anyway!
There's a few good advisors on here (to which I am not.) that can help.
Also, most lenders let you move three months before your existing mortgage ends as long as its with them.
Most new mortgages have a fee, £99 up to £1500 for five year fixed at 2.39% for example. The better the deal the more expensive it is, so it would seem to me anyway.
I'm pretty sure credit checks will appear on your rating but I doubt it'd make much impact unless you're a risk anyway!
There's a few good advisors on here (to which I am not.) that can help.
Also, most lenders let you move three months before your existing mortgage ends as long as its with them.
I suspect you will get credit checked when you reapply for the next fixed rate.
If you have a clearing bank credit card with an outstanding balance and ask to convert it to a personal loan and cancel the card, they still might refuse you on the basis of your credit score, even if it reduces your monthly repayment thanks to a lower interest rate, and would get the borrowing paid off quicker.
Try to close your ears when the banks say they are looking after your best interests.........spherical objects.
If you have a clearing bank credit card with an outstanding balance and ask to convert it to a personal loan and cancel the card, they still might refuse you on the basis of your credit score, even if it reduces your monthly repayment thanks to a lower interest rate, and would get the borrowing paid off quicker.
Try to close your ears when the banks say they are looking after your best interests.........spherical objects.
PistonSmegs said:
Hello,
I wonder if I can pull on the experience and knowledge of PH!
It's not an issue yet but I took out my a 5 year fixed rate mortgage 2 years ago, so still have 3 years remaining. I'm happy with the rate and monthly amount.
What actually happens after the fixed rate runs out? Looking at my paperwork the bank says I'll then go onto their standard variable rate, but what if I want another fixed rate?
Do I need to reapply?
More importantly, will I be credit checked by them? Or be finance checked? (I ask as I would like to buy a brand new car soon (Well, a lease deal actually!) so that means I would still have the montly payment at the time of getting a new mortgage - would that affect things?
Would I be charged an arrangement fee?
Is it just a case of ringing them near the end of the fixed rate deal and asking what my options are?
Sorry for all the questions!
Thanks in advance for anyone taking the time to reply.
Cheers!
When your fixed rate ends you will automatically revert to the lenders SVR. At this point you are free to look at what other lenders may offer you as well as your current lender. If you stay with your current lender on a new product they won't re-score you and the process will be fairly simple but most lenders have dual products (some for new clients and some for existing) meaning that the products are not a competitive as their product for new clients or what another lender would potentially offer you if you went to them.I wonder if I can pull on the experience and knowledge of PH!
It's not an issue yet but I took out my a 5 year fixed rate mortgage 2 years ago, so still have 3 years remaining. I'm happy with the rate and monthly amount.
What actually happens after the fixed rate runs out? Looking at my paperwork the bank says I'll then go onto their standard variable rate, but what if I want another fixed rate?
Do I need to reapply?
More importantly, will I be credit checked by them? Or be finance checked? (I ask as I would like to buy a brand new car soon (Well, a lease deal actually!) so that means I would still have the montly payment at the time of getting a new mortgage - would that affect things?
Would I be charged an arrangement fee?
Is it just a case of ringing them near the end of the fixed rate deal and asking what my options are?
Sorry for all the questions!
Thanks in advance for anyone taking the time to reply.
Cheers!
If you decide to move to a new lender then yes your new finance agreement will show on your credit file and will affect affordability so if it was tight on the initial application stage then next time around you may have a limited choice of lenders.
Invariably, you will be charged fee's even by your current lender. Most lenders have a selection of product to choose from. Some with high fee's and low rates and some with low/no fee's but higher rates. Your balance will dictate whether it's better to go for the lower rate and the higher fee's or vice versa.
Slightly off topic but relevant: What would happen if the house has gone up in value since the original fixed term?
for example, say we purchased our house for £100k. It is now valued at £120k (in our opinion at the end of the fixed term product). The original mortgage was a % of the original value but the increased value means that our new mortgage LTV would lower and we should therefore be entitiled to a lower borrowing rate.
Do we have to have estate agent proposals or would the bank believe what we said? Would we have to pay for a professional surveyor aswell?
Thanks all.
for example, say we purchased our house for £100k. It is now valued at £120k (in our opinion at the end of the fixed term product). The original mortgage was a % of the original value but the increased value means that our new mortgage LTV would lower and we should therefore be entitiled to a lower borrowing rate.
Do we have to have estate agent proposals or would the bank believe what we said? Would we have to pay for a professional surveyor aswell?
Thanks all.
Remortgaging isn't so common now but 10+ years ago I was remortgaging every 2-3 years.
Effectively you're taking out a new mortgage so will have a valuation fee and legal fees of the lender although sometimes they will include those in the deal. You will also have the mortgage redemption fee from your current lender.
Then of course you have the booking fees and arrangement fees of new lender etc.
It's all then a simple case of putting the figures into Excel and seeing which is cheapest over 2/3/4/5 years. Find yourself a decent SMR and you'll stay put, I've being with Nationwide now for several years enjoying their BR+2% deal
Effectively you're taking out a new mortgage so will have a valuation fee and legal fees of the lender although sometimes they will include those in the deal. You will also have the mortgage redemption fee from your current lender.
Then of course you have the booking fees and arrangement fees of new lender etc.
It's all then a simple case of putting the figures into Excel and seeing which is cheapest over 2/3/4/5 years. Find yourself a decent SMR and you'll stay put, I've being with Nationwide now for several years enjoying their BR+2% deal
padhinbed said:
Slightly off topic but relevant: What would happen if the house has gone up in value since the original fixed term?
for example, say we purchased our house for £100k. It is now valued at £120k (in our opinion at the end of the fixed term product). The original mortgage was a % of the original value but the increased value means that our new mortgage LTV would lower and we should therefore be entitiled to a lower borrowing rate.
Do we have to have estate agent proposals or would the bank believe what we said? Would we have to pay for a professional surveyor aswell?
Thanks all.
As far as the lender is concerned your opinion on valuation is as good as sticking your finger in the air for example, say we purchased our house for £100k. It is now valued at £120k (in our opinion at the end of the fixed term product). The original mortgage was a % of the original value but the increased value means that our new mortgage LTV would lower and we should therefore be entitiled to a lower borrowing rate.
Do we have to have estate agent proposals or would the bank believe what we said? Would we have to pay for a professional surveyor aswell?
Thanks all.
They will undertake an online valuation based on their internal methodology and you will be assessed on this figure (as I was recently by HSBC Premier)...you are thereafter free to pay for a more thorough valuation from one of their panel and see if this alters matters (which I did).
With lenders slightly frightened to take on higher LTVs you may be surprised at the figure they arrive at
Sir Bagalot said:
Remortgaging isn't so common now but 10+ years ago I was remortgaging every 2-3 years.
Effectively you're taking out a new mortgage so will have a valuation fee and legal fees of the lender although sometimes they will include those in the deal. You will also have the mortgage redemption fee from your current lender.
Then of course you have the booking fees and arrangement fees of new lender etc.
It's all then a simple case of putting the figures into Excel and seeing which is cheapest over 2/3/4/5 years. Find yourself a decent SMR and you'll stay put, I've being with Nationwide now for several years enjoying their BR+2% deal
lots of people that were lucky enough to be with Nationwide/C&G/Woolwich have reverted to SVR around BBR+2% and have got off the remortgage merry go round; the lenders have got wise to that and moved the reversion rate for new customers to around 4%+; so there are now a new breed of customer doing the frequent remortgage where eligible as the reversion or SVR are now very uncompetitve compared to products.Effectively you're taking out a new mortgage so will have a valuation fee and legal fees of the lender although sometimes they will include those in the deal. You will also have the mortgage redemption fee from your current lender.
Then of course you have the booking fees and arrangement fees of new lender etc.
It's all then a simple case of putting the figures into Excel and seeing which is cheapest over 2/3/4/5 years. Find yourself a decent SMR and you'll stay put, I've being with Nationwide now for several years enjoying their BR+2% deal
this is particulary relevant to people starting with smaller deposits as the rate & reversion are very poor and as soon as they have an increase in equity are looking for a better ltv deal.
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