Interest rates and mortgages.....

[baldkev]

Remortgage now with existing lender, Usually they will waive exit fees if you say you are planning to get another lender who will give good rates or pay your existing exit fees.

Thanks, I'll look into that.

Yep prices are high at the mo, theres a couple of places near me where i still get realistic prices.

Thanks, kev

 

[Blackswanwood]

Thanks, I'll look into that.

Yep prices are high at the mo, theres a couple of places near me where i still get realistic prices.

Thanks, kev

Your call what you do but the suggestion to remortgage now to borrow more before you need the money is highly unlikely to be something any lender or mortgage adviser would advise or let you do. It would be seen as irresponsible lending by the FCA.

You would be borrowing money at a higher rate than the interest available holding it on deposit until you need it. If the purchase of the land fell through you would incur early redemption charges to unwind the borrowing that you don’t need.

 

[Jameshow]

Hi guys



Very true. Where we live the house prices have gone mental and a 2 bed is 550k upwards.... so if we wanted to move we would have to move further away to a cheaper area. We are lucky to be in a popular seaside town.



Its extremely true, the novelty has usually worn off by the time my new toys reach the workshop! Thats part of my problem, ive spent a lot on kit, although it also means the range and scale of jobs i can take on has increased now i have a full workshop setup ( thats my exvuse and im sticking to it )

Your call what you do but the suggestion to remortgage now to borrow more before you need the money is highly unlikely to be something any lender or mortgage adviser would advise or let you do. It would be seen as irresponsible lending by the FCA.

You would be borrowing money at a higher rate than the interest available holding it on deposit until you need it. If the purchase of the land fell through you would incur early redemption charges to unwind the borrowing that you don’t need.

You could get it in principle so that when the land deal comes through you can buy asap.

The draw down the remainder for the build as and when.

What you need to be careful of is the bank pulling the funding mid build.

Cheers James

Cheers James

 

[Spectric]

There's no such thing as a free lunch, people (sometimes even very wealthy people) are often naive

Yes I think people who have a gift for making money are often not that practical, they may have expensive houses and toys but do have a reliance on people who are skilled with their hands. A good example was a guy who got me to quote on lots of picture lights and breakout boxes for the alarm system, when I turned up to actually do the job he had had the decorators in and all new expensive wall paper even though I had said it was a lot of chasing to do.

 

[Spectric]

Depending on your age and family status, is this where you want to live for the near future or rather than buying land to extend could you just find a more suitable property as the starting point, definately a lot less hassle.

 

[baldkev]

Your call what you do but the suggestion to remortgage now to borrow more before you need the money is highly unlikely to be something any lender or mortgage adviser would advise or let you do. It would be seen as irresponsible lending by the FCA.

You would be borrowing money at a higher rate than the interest available holding it on deposit until you need it. If the purchase of the land fell through you would incur early redemption charges to unwind the borrowing that you don’t need.

A good point....

You could get it in principle so that when the land deal comes through you can buy asap.

The draw down the remainder for the build as and when.

What you need to be careful of is the bank pulling the funding mid build.

Also a good point.... timing is everything i guess. Mortgage offers are usually for 6 months, and if the planning backlog truly is 9 months......


@Spectric , yep if we can buy the land and do the build, we will be staying here for a loooong time. Unless mrs bald leaves me! Due to house prices, it honestly is cheaper to do the work than move.
Weve been trying to pull this off for years

 

[PerryGunn]

If you have equity in the property and are going to remortgage at some point, it might be worth looking at a fixed rate offset arrangement that allows you a larger 'pot' than is needed to repay your current loan.

e.g. if your current mortgage is, say, £200k on a property worth £400k, you could get an arrangement that allows you a £300k loan that can be be drawn down as and when required. You'd need to use £200k to settle the existing mortgage but can draw upon the other £100k when you need it.

The advantage of this is that you know you have access to the additional funds, and the interest rate you'll be charged, but only pay interest on the amount you have actually drawn down.

The offset part allows you to link other bank accounts (with the same provider) to the mortgage account with any funds in those being counted against the outstanding mortgage amount and interest only being charged on the net amount (calculated daily)

e.g. if you'd drawn £250k on the mortgage account but had £10k in your other bank accounts you'd only pay interest on £240k.

This can be very useful if you're self-employed and keep money back to settle tax-bills, pay suppliers etc. You do, however, need to switch banks to the new provider so that all your accounts can be offset against the mortgage but switching banks is virtually painless these days as they do all the work.

We setup an arrangement like this with First Direct when we remortgaged as we were considering adding a second floor on an existing extension - never got around to adding the extra floor so didn't need to draw on the additional funds but the offsetting alone saved an appreciable amount of interest.

 

[baldkev]

@PerryGunn , thank you, thats a good shout! It would allow us to lock in interest rates...... yes we do have enough equity for that, sounds very good

 

[user22161]

This thread reminded me of interest rates years ago. We were doing a self-build in 1978-79, base rate went to 17% and were paying 3% over base for the loan until able to obtain a mortgage on completion. Rates these days are peanuts in comparison.

 

[Droogs]

They are about yo go up

 

[baldkev]

They are about yo go up

Yep, if it hits those kind of levels (20%) lots of people will loose their homes. Of course it'll rise a bit more soon because of the rise in minimum wages etc. Im hoping to sort out a deal with either my bank or current mortgage lender based on the suggestion by perry gunn and will contact our mortgage broker as suggested in case he has any further suggestions.

Thank you all for being so helpful

 

[Chunkytfg]

I’ve so far been through two major house price corrections. I can remember a streets of houses being sold for £1. Interests rates jumping to 15% in a matter of months. Negative equity locking people into not being able to move. I think it comes in cycles as each generation forgets the pain endured by the last as the banks get silly with lending. We are here again, mortgages that are interest only, silly house prices. Just needs a few percentage points on the interest rates to start people having to sell / be repossessed to start the cycle again.

I think this is the scary bit I'm just waiting for.

The rates have been so low for so long that I dont think people have realised just how hard it'll hit them with the smallest of rises!

We bought our house 2 years ago with a mere 10% deposit on the outskirts of London. We're quite fortunate to have 2 pretty good jobs between us which meant we borrowed well under the max the bank said potentially they would lend us however it was still scary looking at the paperwork and seeing they'd stress tested out finances at a 10% interest rate with payments that would only just be covered by my own wages with me being the highest earner!

I can see people becoming unstuck very very quickly with a few % increase. I have colleagues who earn equally well with even more overtime that I do who barely make it month to month always pleading poverty but yet finding the money for nights out and £100 a month Sky TV packages etc!

 

[Droogs]

The bank should have tested at 7.5% and 12% and shown you the results as this is the rates that the FSA state be used. Even so, I remember when mortgage rates were at 17 1/2% and the average house cost £35K not to bad you may think but I was earning £27 a day as a LCpl. I was glad that I had no other expenses other than paying my parents mortgage as I lived in the block so had already paid for my rent and food by the time I got my pay. But it was hard to do even then. Luckily it only lasted a few months before they were able to manage on their own again. A sobering time (literally).
So glad ours will be paid off within the next 12 months all going well and not having that Damacledian Sword over our heads anymore

 

[Phil Pascoe]

I remember the morning the rates went from 10% to 15%. My cousin rang his bank manager, Derek *****, and asked what he should do. My cousin's wife was pregnant at the time. Call the baby Derek, came the reply. What if it's a girl? my cousin said. Call her Derek ........... Fortunately the rise was very short lived.

 

[baldkev]

Apparently the mortgage companies are starting to downgrade property valuations and the type of deal im hoping to get is apparently very limited to who does it now. ( this was from my broker )
I will contact my bank later. I tried going in branch yesterday but the opening times are so reduced its crazy.

 

[Jameshow]

Are you in North Devon kev?

We used a broker down there very helpful guy!

I can find his details if you like or call webbers estate agents for it. (He was helping us in a holiday chalet which eventually was guzumped)

Cheers James

 

[Phil Pascoe]

Apparently the mortgage companies are starting to downgrade property valuations and the type of deal im hoping to get is apparently very limited to who does it now. ( this was from my broker )
I will contact my bank later. I tried going in branch yesterday but the opening times are so reduced its crazy.

My wife works for a bank (minimum mortage they give - £250,000, £500,000 in up Country branches) - she said their valuers are putting in values several tens of thousands under estate agents prices.

 

[Ozi]

This thread reminded me of interest rates years ago. We were doing a self-build in 1978-79, base rate went to 17% and were paying 3% over base for the loan until able to obtain a mortgage on completion. Rates these days are peanuts in comparison.

Awful rate to have to pay but we benefited from inflation, I remember my Dad struggling to pay a £10,000 mortgage until inflation and rising wadges wiped it out in about 3 years. Not that I want to see 32% inflation ever again. If it ever does go high remember to buy undated stock.

 

[baldkev]

Are you in North Devon kev?

We used a broker down there very helpful guy!

I can find his details if you like or call webbers estate agents for it. (He was helping us in a holiday chalet which eventually was guzumped)

Cheers James

Hi james, we are in south devon, but thank you for offering.

. If it ever does go high remember to buy undated stock

Unfortunately I have a feeling if everything goes high, i wont be able to buy any stock.... in fact.... i already cant

 

[Droogs]

I can't afford stock either sso will just have to keep soaking my feet every other day