Be Excellent To Each Other

My mortgage payments are going up by 12.5% next month.

Bah.

Mine go up 75% next month if I get my arse in gear.

I suspect there's a new house involved with yours, though.

Well that sucks. End of an interest-only phase?

End of a fixed rate. I wasn't expecting that kind of jump, though.

I'll be peeking around at other mortgages later.

Not till next year. This jump is a result of putting most of my payrise out of reach of the wife, lest she spend it.

Smart move.

Jesus, your fixed rate must've been hella low to start with; my five year fixed rate ended a few months ago and my payments went down about £100 due to the interest rate drop in the interim.

Hmm, I'm not sure. We got the mortgage two years ago, so I'll put some numbers up later on.

As you fixed it much more recently than I had then yeah, you wouldn't see the same drop I did; but I'm still surprised it's going up so much. Banks: what can you do?

12.5% increase on an interest only is only the equivalent of going from 4% to 4.5% (say)

Aye but with the general interest rate taking a massive dive over the last few years I suppose I'm just surprised that anyone's interest rate is going up at all when moving from a fixed rate to a standard variable rate. Mind you, I'm saying that from the point of view of someone who probably had quite a high fixed rate and who fixed it a good few years ago which isn't presumably the case for Grim so my mental model's flawed right there.

Depending on banks, SVR can be fucking appalling. I got a good deal with A&L 5 years ago, and their SVR is still 4.99%, against the Santander 4.24% (which is the same fucking bank, cunts). Meanwhile I'm about to move to First Direct where SVR is 3.49%, but you can't get onto that unless you come out of a deal which are all 2 years plus and priced significantly higher.

I think I'm unlikely to get my 0.1% above base rate interest only tracker again. If I'd have been working lots over the past 4 years, we'd have lopped a huge chunk from the mortgage. MR SAD FACE

but it meant we could afford to live MR HAPPY FACE

Fair enough; it seems in my case that my fixed rate was pretty high (5.something I think) and Scottish Widows current SVR isn't too bad (3.99%) so I got a drop that others might not see.

My fixed rate ended last October (interest only mortgage) and my monthly payment dropped by £30.

This is with Santander, too. Who are twats. If I wasn't in negative equity and therefore unable to realistically remortgage, I'd shift straight off.

When I came off my fixed rate deal in 2009, my monthly payment (interest only mortgage) went from £520 to £249. And it's still there.

Sweet Christ! I pay 1200 a month in rent

Is that for a house? Impressive - my mortgage is £289 a month for a poky little one-bed flat that I bought for £80K and is now only worth £70K

Shouldn't have gone interest-only really, but hindsight's a bitch.

Yes. Three-bed mid-terrace house, about 800 sq ft, bought in 2006 for £132k with a 10% deposit.

There's a reason I live in the (sort-of) sticks.

It was one of the driving reasons to move North, as we doubted we could (ever) afford to have a comfortable commute and a larger house to live in if we were to stay in the South East.

Helen got a new mortgage last December-ish, upping her repayments* to £950 on a 2-year fixed at 2.99%. It chops 5 years off the term, or something. I should remind her to throw a load of her savings at the capital actually, which she intended to do but keeps forgetting about.

* Because I pay half of it now, so she actually pays significantly less (as do I, yet I'm far skinter somehow )

I'm surprised to see a couple of people mentioning interest-only mortgages, isn't that generally considered a bad idea? Or is there some financial wizardry at work here that I'm missing?

I don't really understand that But I'm not on an interest only mortgage, if that makes any difference.


I'm with Santander

I will investigate tonight.

My thinking was "Can I afford a repayment mortgage on my own?", "Is this cheaper than renting" so was driven by necessity, rather than desire.

So you only pay off the interest? When do you start paying off the actual capital?

Renting my flat would be cheaper than the mortgage payments if I was interest only (until my fixed rate finished it would have been massively cheaper) so that wouldn't have worked for me. Also, at least if you're renting you know you can afford the rent and if they try to change it you can walk away, not so much if there's an interest rate hike.

You don't.

Frankly, it is a disaster waiting to happen if you end up owing more than the property is worth, but I was only going to stay there for a couple of years...

When the rates were up about 5.75% it was quite painful for me. Now, it's low enough for me to not worry to much about paying it, and the rent up here.

This. Except it didn't really work out for me, so I need to get a remortgaging plan sorted.

Much more tricky to get an interest only mortgage these days though, I assume?

I've only ever gone repayment, interest only is too scary.

I assume so. When we move, it'll be a repayment one, hopefully fixed. I've got a lot of homework to do on that at some point in the next few weeks maybe, along with tidying a garden, replacing a door and finishing painting.

how accurate are Zoopla and sites like that with their 'estimates' for sale prices?

Back when I had a mortgage, in the heady days before the housing bubble burst, Halifax wouldn't let me switch to interest-only without evidence that I was investing somewhere in case I needed to repay. So I sold it for massive profit instead

12.5% is the increase from 4% to 4.5%. But if you are on repayment then the capital element won't change, thus implying that your interest rate increase is higher than 12.5% of the original rate.

Interest only mortgages are a good thing in the right circumstances. I knew that I was on a rapidly rising payscale, but in 2007 couldn't have hoped to afford a repayment mortgage and get married. For 2 years (to the day) I paid only interest and have since paid capital, all things being equal, my 25 year mortgage would be paid within 15 years.

Where the problem arises is where they are sold as a cheap, (and long term cheap) option, with capital repayment considered entirely optional. Then you can't remortgage if you have no equity, but the presumption in 2007 was that the equity would make itself due to house price increases. I've been 'stung' by this notionally at least, as I'm only now, 5 years in, able to remortgage. This means I haven't been able to get the Grim... and Craster supercheap rates, but I view it as I expected to pay 5% thoroughout anyway, so I've not lost, I've just not won either.

So... You owe the capital forever?!

No, you pay it off when the mortgage period expires.

In a lumper? So you're paying a fairly small monthly amount to cover the interest, and meanwhile you're saving up to pay the capital back at the end? I'd be so rubbish at that!

Or you sell the house.

I do believe this is what ought to happen in order to pay the 'lumper' off at the end.

The idea is that the house will have tripled in value in the interim, making you rich.

Mortgage thread, mods?

Naaaa, I'd prefer to contain my "being bent over for rent" depression to the Nay Thread.

I'm just going in to a meeting. I'll let Craster do it

On it.

That pretty much what endowment mortgages were, just bundled up, isn't it? You have a interest only mortgage and a savings investment thingy, and you pay off the interest and pay some cash into the investment, and then at the end the investment has grown to be more than the outstanding mortgage, so you're rich! Or not, as the case often was.

My understanding from property law, yes.

This.

I went interest only in the first place because a) I couldn't afford the house I wanted without it b) I did a liar's loan self-cert, gambling my income would rise to help me out (it did) and c) it was a first home I wasn't going to own long. 6.5 years later, I'm still there, although I might have moved if the market hadn't fallen.

However, I'm in a weird position with my ex where she gets most or all of the equity when I move, so a capital repayment mortgage is effectively saving towards money I can't keep anyway. Hence I've never re-mortgaged. Effectively, I'm renting, but cheaper, I can do whatever I like to the house and I can't just hand the keys in and walk away at the end. Swings and roundabouts.

How does it take two weeks to do searches? Aren't they all just done on a giant database or something?

*grumbles*

You go to the local authority and request a couple of forms (CON29R and CON29O) using the property reference. These contain information which might, or might not, need following up on. If there's a footpath, or somesuch. You've also got to look at the land registry documents and chase anything up that looks like it could cause a problem. So, although they all are on a giant database, interpreting the information takes time, and sa fixed fee conveyancing is often not too profitable if there's a problem, it tends to get pushed to the bottom of the pile. As I understand it.