House buying, mortgages, insurance, etc

[TxRover]

The really fun bit is some of the underhanded shite some lenders try. My lender (U.S.) snuck this gem deep into the paperwork. I paraphrase to add clarity:

If you elect to make additional payments separately or with your normal monthly payment, you must designate how they are allocated. If you do not designate, they are held until reaching a total equal to a normal monthly payment and are then credited as a monthly payment and extending your due date. If you specify the additional payment as principle reduction, we will hold the excess amount allocated to principle until it equals or exceeds a normal monthly payment and only then will the amount equal to a normal monthly payment be allocated to principle reduction.

 

Basically, they figure people that round up to the next $100 or more won’t notice they are getting to hold money for months or years interest free.

[carpetmonster]

5 hours ago, Molotov said:

It used to be an option to leave £1 on your mortgage so that the lender looked after your deeds rather than safely store paper copies at home.

No longer an issue these days.

I didn’t realise that. Any idea how long the new process takes between solicitor and bank and Land Registry? 

[parsforlife]

11 hours ago, Hedgecutter said:

Mortgages: is there a minimum balance amount that you can have sitting around long term, let's say £100, resulting in monthly payments of <£10pm?  Or does one hit a point when your 5 year fixed deal comes to an end and you're not worth playing with anymore?

At my current rate of overpaying, a balance could be down to £0 within 4 years, but with a whopping 15 years of the term still remaining.  Is this a nice but daft situation to be in?

This has come about because I've always paid the same meaty overall monthly lump, but with a default preference that the monthly charge is recalculated and reduced rather than the term length.  Therefore, because of my same lump payments, the overpayment amount has increased every month (still within allowed limits), which has seriously eaten away at the amount owed.

Should I be changing to a reduced term option, or is there little point now if the amount that's going to be in the account for so long would be miniscule for so long?

Maybe misunderstanding things here, but is your mortgage not like most other people effectively in 2 parts?  You agree a loan of X to expected be payed over so many years,  but you only really agree on the nitty gritty for a few years at a time? 

So once your fixed deal comes to an end your options are quite wide open about how you come to repaying the remainder,. Other firms may not want take you on if it’s only very short term your looking at but the bank your with kinda has no choice, it’s their money after all.

4 hours ago, TxRover said:

The really fun bit is some of the underhanded shite some lenders try. My lender (U.S.) snuck this gem deep into the paperwork. I paraphrase to add clarity:

If you elect to make additional payments separately or with your normal monthly payment, you must designate how they are allocated. If you do not designate, they are held until reaching a total equal to a normal monthly payment and are then credited as a monthly payment and extending your due date. If you specify the additional payment as principle reduction, we will hold the excess amount allocated to principle until it equals or exceeds a normal monthly payment and only then will the amount equal to a normal monthly payment be allocated to principle reduction.

 

Basically, they figure people that round up to the next $100 or more won’t notice they are getting to hold money for months or years interest free.

Thankfully I’m pretty certain that shit is illegal here, ignoring early repayment charges any payment needs to be applied immediately and must be applied to the most costly part of the loan.   So for example if you have 150k mortgage at 5% and an arrangement fee that been added on of £500 at 0.5% and you overpay by £500 that must come off the mortgage portion.  

[Gnash]

2 hours ago, Hedgecutter said:

Actually, I've just seen a downside that the lender person didn't bring up, those crafty f***ers.  In the case that someone decided to overpay the maximum within the lender's limits, the max amount the homeowner can knock off the outstanding balance each year becomes smaller and smaller each year if the lender keeps dropping the monthly payment amount (i.e. more interest for longer ). 

Interesting, that point will differ between different lenders.  With mine you can always pay 10% of the initial balance each year during the discount period with incurring an ERC.

[Hedgecutter]

19 hours ago, Gnash said:

Interesting, that point will differ between different lenders.  With mine you can always pay 10% of the initial balance each year during the discount period with incurring an ERC.

What I meant was that there's always the 10% of the initial available as a maximum OP (let's say 20k per year on an initial £200k), but if they automatically drop your monthly fee from 400pm to 300pm then the most you can knock of in a year is ((12x300)+20k), which is less than ((12x400)+20k).

Edited April 28, 2023 by Hedgecutter

[Buttocks Brown]

On 27/04/2023 at 11:15, Hedgecutter said:

Mortgages: is there a minimum balance amount that you can have sitting around long term, let's say £100, resulting in monthly payments of <£10pm?  Or does one hit a point when your 5 year fixed deal comes to an end and you're not worth playing with anymore?

At my current rate of overpaying, a balance could be down to £0 within 4 years, but with a whopping 15 years of the term still remaining.  Is this a nice but daft situation to be in?

This has come about because I've always paid the same meaty overall monthly lump, but with a default preference that the monthly charge is recalculated and reduced rather than the term length.  Therefore, because of my same lump payments, the overpayment amount has increased every month (still within allowed limits), which has seriously eaten away at the amount owed.

Should I be changing to a reduced term option, or is there little point now if the amount that's going to be in the account for so long would be miniscule for so long?

We're in a similar situation. Have been making big overpayments for a few years and will have enough money to pay off the mortgage completely when the current fix (1.89%) ends. Spoke to our lender (Nationwide) and they said that they waive the ERC if you're in the final month of your fix. Just need to confirm with them the balance during that month and settle up (by cheque, bank transfer or in branch). Once paid off, they send out confirmation that the balance is £0; our solicitors then discharge the mortgage to get hold of the deeds. And relax.....!

Just to add... we had thought about investing rather than making overpayments but went for the peace of mind of getting rid of the mortgage ASAP. Depends on how mortgage rates go the next decade but, by my calculations, overpaying will end up saving us £35K+ in future interest payments. 

Edited April 28, 2023 by Buttocks Brown

[BukyOHare]

I've taken the plunge and become a self employed mortgage advisor. Obviously I'm keen to help as many people as I can, so if anyone on here has any queries around their current or future mortgage or protection products, please feel free to send me a message and I'll answer them no problem. Cheers.

[Molotov]

16 minutes ago, BukyOHare said:

I've taken the plunge and become a self employed mortgage advisor. Obviously I'm keen to help as many people as I can, so if anyone on here has any queries around their current or future mortgage or protection products, please feel free to send me a message and I'll answer them no problem. Cheers.

Hope you make a success of this. 
I have always done my own research and my starting point would be to go here initially for an idea of what mortgage offers are available.

https://www.moneysavingexpert.com/mortgages/best-buys

Do you provide a different approach/service/rates that would enable me to secure a better deal including any additional commission you would charge?

[BukyOHare]

1 minute ago, Molotov said:

Hope you make a success of this. 
I have always done my own research and my starting point would be to go here initially for an idea of what mortgage offers are available.

https://www.moneysavingexpert.com/mortgages/best-buys

Do you provide a different approach/service/rates that would enable me to secure a better deal including any additional commission you would charge?

Good question!

These types of comparison sites are definitely good starting points but what they don't show is someone's eligibility / affordability for a particular deal or guarantee that the rate shown will actually still be available.

Getting some basic information early on allows me to research the market and make suitable  recommendation/s in live time directly from the lenders. In total I have access to around 80+ different ones so don't have any bias or restrictions and I won't charge anyone from here a fee either. 

Apologies for the long post.

[101]

41 minutes ago, BukyOHare said:

I've taken the plunge and become a self employed mortgage advisor. Obviously I'm keen to help as many people as I can, so if anyone on here has any queries around their current or future mortgage or protection products, please feel free to send me a message and I'll answer them no problem. Cheers.

I'll be severely dissapointed if you turn out to have qualifications for this rather than just being an enthusiastic amateur forum user.

In which case should it all go belly up this thread could have fantastic potential.

[BukyOHare]

11 hours ago, 101 said:

I'll be severely dissapointed if you turn out to have qualifications for this rather than just being an enthusiastic amateur forum user.

In which case should it all go belly up this thread could have fantastic potential.

Sorry to disappoint, enthusiastic and qualified. 

[Sergeant Wilson]

3 minutes ago, BukyOHare said:

Sorry to disappoint, enthusiastic and qualified. 

You've no business here then. Leave it to the rank amateurs to give important advice.

Has @TxRoverbeen on yet?

[TxRover]

3 hours ago, Sergeant Wilson said:

You've no business here then. Leave it to the rank amateurs to give important advice.

Has @TxRoverbeen on yet?

Scroll up a few…

[BukyOHare]

For those unaware, the Bank of England raised interest rates at the end of May from 4.25% to 4.50%.

This is the 12th rise since December 2021.

The next Bank rate decision will be announced on 22 June 2023. It is expected to rise again.

The rates we all benefitted from in the past of 1% and 2% are distant memories for a variety of reasons that I won't bore you on.

It is vital that people check out the whole of the market if they're coming off these previously low rates anytime soon, within the next year. Do not just accept what your current lender offers you without comparing what else is available to you.

You can generally start locking in your next product 6 months before the end of your current deal.

One other thing if anybody is on an interest only mortgage, please, please, please, check how your plans to repay it are performing against what you owe. Especially now in the current climate.

I can't stress how important this is.

[Moomintroll]

@BukyOHareI have 2 and a bit years left on my current fixed rate & after that will have 34 months left before full repayment. Am I right in thinking that the Interest rate rises wont really affect me so close to the end or am I in for a nasty surprise?

[BukyOHare]

55 minutes ago, Moomintroll said:

@BukyOHareI have 2 and a bit years left on my current fixed rate & after that will have 34 months left before full repayment. Am I right in thinking that the Interest rate rises wont really affect me so close to the end or am I in for a nasty surprise?

Broadly speaking you're "fine" so long as you're on your current fixed rate deal.

Its when you come off that deal that you could notice a material difference in your monthly payments which is the situation people are finding themselves in.

I don't know what rates are going to be like in 2 and a bit years time better than anyone else does.

They should have dropped from where they are now but not to the level that you're likely to be on at the moment.

 

 

 

 

 

 

[BukyOHare]

I should add there are usually options available to help keep people within their budget if they look for advice early enough.

The problem I'm finding just now is that a growing number of people are coming off their fixed deals, struggling by each month on products that they've been given and letting time pass. Don't do it!

A person's age definitely has a massive part to play in the current climate to get a product most suitable for them and importantly within their budget.

Letting time pass costs money being on expensive deals and lessens the potential opportunities that are out there.

Hope that makes some sense.

[Hedgecutter]

This might sound horribly unsympathetic, but did people not heed advice when they took out their mortgage to budget for interest rises, particularly those that started within the past decade when rates were at record lows?  Do mortgage lenders take account of potential rises when underwriting and assessing the ability for one to pay? 

... or is it a case that they did indeed budget, but in the assumption that lecky and food would remain the same?

[Loonytoons]

1 hour ago, Moomintroll said:

@BukyOHareI have 2 and a bit years left on my current fixed rate & after that will have 34 months left before full repayment. Am I right in thinking that the Interest rate rises wont really affect me so close to the end or am I in for a nasty surprise?

Use this to give you an idea of what to expect.

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

Plugging in £40k still to pay over 5 years at 2% interest shows £700 per month currently and about £24.5k still to pay after another 2 years.

Plug that figure in for 3 years left and 5% interest and the payment is £734.

Obviously know idea what your figures really are but not a massive shock when you've so little of the term left.

Basically 5% interest over 3 years you're looking at £300 per month per £10k still owed.  

Edited June 4, 2023 by Loonytoons

[Zetterlund]

4 hours ago, BukyOHare said:

For those unaware, the Bank of England raised interest rates at the end of May from 4.25% to 4.50%.

This is the 12th rise since December 2021.

The next Bank rate decision will be announced on 22 June 2023. It is expected to rise again.

The rates we all benefitted from in the past of 1% and 2% are distant memories for a variety of reasons that I won't bore you on.

It is vital that people check out the whole of the market if they're coming off these previously low rates anytime soon, within the next year. Do not just accept what your current lender offers you without comparing what else is available to you.

You can generally start locking in your next product 6 months before the end of your current deal.

One other thing if anybody is on an interest only mortgage, please, please, please, check how your plans to repay it are performing against what you owe. Especially now in the current climate.

I can't stress how important this is.

Yup. Although current interest rates are historically 'normal', most younger people with mortgages have only ever known ultra-low rates.

I've always thought it's scary how when people go to a bank or mortgage advisor to see how much they can borrow, they generally tend to go with that max amount as their budget. Plenty of our friends have done this over the last 10 years or so.

Fortunately we've been overpaying since buying our house in 2008 and cleared the mortgage last year, which by pure luck ended up being pretty good timing.

Must admit I didn't expect interest rates to rise so far so quickly, mainly because western countries themselves are so heavily indebted and essentially bankrupt. But it seems since Covid we've decided to go full YOLO and stop giving a shit about trying to be responsible.