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Gavin Richardson, CeMAP, Cert II, Head of Residential mortgages at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 01732 471 613
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Question
I am coming to the end of my deal and looking at taking out a ten-year fixed rate mortgage to try and protect my finances from future interest rate rises? I have heard rates are starting to go up on these products – have I missed the boat?
Answer
No, you haven’t missed the boat although we have noticed that rates are beginning to rise, albeit incrementally. Apart from the current, low rates and protecting yourself against future rate rises, the advantages of taking out a 10- year fixed rate include peace of mind knowing exactly how much your monthly payments will be for the next 120 months; and, fewer lender arrangement fees to pay. For example, at around £1,000, lender arrangement fees on 2, 5 and 10-year fixed rates are very similar at the moment which means on a 2 year fixed you could end up spending £5,000 on fees over the next 10 years compared to just £1,000 on a 10 year rate. However, do bear in mind that lenders usually require larger deposits (c25%) for these long-term rates and the Early Redemption Charges can be more onerous. I recommend that you talk to a mortgage broker before committing yourself to this type of right to ensure that it is the right option for you. If you don’t already have a break feel free to give me a call.
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Question
My wife and I are both in our late 30s and we have been saving for a deposit for our mortgage for more than five years. We still don’t have enough for our first home, but we hope to be ready in about two years’ time. The problem is we will be nearly 40 then – will this work against us when applying? If so, what can we do to increase our chances?
Answer
No, it shouldn’t work against you. Lenders offer mortgage terms of 25-30 years as standard which means you will both still be of working age when the loan matures. Most lenders set an upper age limit for borrowers of 70 years.
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Question
Our current four-year mortgage deal runs until 2020 and is perfectly affordable. However, it seems very unlikely my wife and I will still be together by the time of our next renewal, so how difficult is it to transfer the mortgage into my name, relying on one salary?
Answer
Buying out your former spouse so that you can stay in the family home is very common particularly where children are factored into the equation. Whilst the process can be straightforward, you will need to remortgage. You cannot simply remove your ex-spouse’s name from the existing mortgage (and title deeds).
If you are in this position, it’s worth knowing that lenders will consider a mixture of income sources which includes but is not limited to salary, maintenance payments, working tax credits/child tax credits and child benefit. The very good news is that most lenders recognise these different types of income as something which can be relied upon and will thus be regarded as ‘traditional income’ when looking at how much they will lend. Generally speaking, these days, lenders will go up to 4.5 times income.
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Question
My husband and I bought a new home last Spring. We took out a competitive two-year tracker mortgage but now that interest-rates look like they are going up are thinking of leaving the deal and moving to a fixed-rate? Would it be worth the cost of the exit fees to do this or should we hang on until April 2019, when our current deal ends?
Answer
As you haven’t provided the loan amount, the rate, what the rate is tracking or details of the early repayment charges, your question is impossible to answer. However, if you are concerned about rate rises, do get in touch to talk through your circumstances in greater detail so that I can furnish you with information to help you take an informed decision.
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