Mortgage mayhem advice

What has changed this week? What does this mean for home-owners and would be buyers? The Chancellor's mini-budget has sent shock waves through financial markets, which has resulted in volatile price changes, meaning lenders are struggling to price mortgage deals. By the time they have set up a new deal, it's already out-of-date as the underlying cost of funds rises sharply. This has resulted in many lenders temporarily withdrawing from the market to allow things to settle. Note that these changes only impact brand new borrowers, so if your application is already in with a lender, or you have a mortgage offer, then don't panic as your rate is secured. My fixed-rate mortgage ends in the new year - can I do anything now? Yes. You should speak to a mortgage broker now to begin the process of looking at the options you have available to replace your deal when it comes to the end of its current rate period. Lenders are super busy and things are taking longer than normal, so if you leave it too close to the end of the current deal you risk falling onto the lender's Standard Variable Rate, which will be expensive, even if you only pay it for a short period of time. Is it worth moving it if there’s an early repayment charge? Be very careful here. Generally, if you have a fixed mortgage with a lender, you also have an early repayment charge (ERC) and these are normally a few thousand pounds for most people. Paying this ERC to ditch your probably very low current deal, to move onto a more expensive deal, is very rarely a good move. However, there will always be certain, very specific, scenarios when it is absolutely the right thing to do, which is why good quality, professional mortgage advice is key. I am ready to buy somewhere - should/can I apply for a mortgage now or wait? There is nothing stopping you from looking at and applying for a mortgage now. The options will be more limited and that may cause issues if you need a more specialist lender, but there are still lots of banks and building societies ready and willing to lend to you. Should I renegotiate the price I’m paying for a home? If you have already committed to buying at a certain price, think very carefully before rocking the boat on a transaction that is already underway. You'll be kicking yourself if you end up torpedoing your own house purchase for the sake of a few grand off the asking price of a property that you love. My mortgage is going up and I can’t afford it - what should I do? Speak to a mortgage broker about the options open to you. It could be as simple as extending the repayment term to bring the monthly cost down. In more extreme cases, then you may need to speak to your lender and ask for help, which they can and will give, but you will be expected to do all you can as well - so expect to have to ditch Sky TV, Netflix, Spotify and the like before the lender will do anything. The key is to not ignore the problem, help is there.

Lenders have pulled their rates, especially fixed rates, as they don’t know what level to set their fixed rates at. What this means for existing homeowners is they will most likely have to select a new higher fixed rate when their current rate ends. If the current rate is ending in the next six months, then they should speak to their mortgage broker now. For would-be buyers, they need to speak to their mortgage broker to confirm the mortgage that's possible for them to secure. This will allow them to see if their dream home is going to be affordable and, in turn, secure a rate once they have had an offer accepted. It is always advisable to have all the documents that the mortgage broker asks for ready and up to date. If your fixed rate deal is ending in the next six months, then you need to review it now. The correct course of action is to speak to your mortgage broker. They will assess your current mortgage and circumstances and advise you on what to do. Some lenders are still lending, and the lenders that have pulled out will be back very soon. Most lenders will have a six-month offer period validity, so this means you can secure a rate now and still complete it once the current rate ends. To check if it is plausible to pay the early repayment charge and move or change your current mortgage deal, you must speak to your mortgage broker. They can do the maths on your behalf. If you are buying a property, then you need to find the property before having an application submitted. The reason being is the lender needs to know what you are buying and for how much. This allows them to check if it is suitable security and for the correct price. If your current mortgage is going up, then speak to your mortgage broker in the first instance. They will consider your current mortgage and personal circumstances and let you know about the correct action to take. This may mean extending the mortgage term if possible or being referred to your current lender. Your broker is the correct person to speak to as the first point of call.

Getting organised is key. If you are coming to the end of your current mortgage deal in the next six months then now is the time to be speaking to an adviser and getting your new rate lined up. Some mortgage lenders will allow you to lock into a rate today so you will be protected should interest rates rise further. If you are buying a property, run through the numbers again, speak to a professional that can wargame your situation at various interest rates to make sure it is still affordable. But, importantly, don't panic, as the markets always go through periods of turmoil and we need to recognise that the super low interest rates of the past decade or so may soon be a memory.

Multiple economic factors have collided all at once and the only weapon we have to combat them is to increase interest rates. Due to the timing of the war in Ukraine, inflation, the rising cost of living and now the slumping value of the pound, the base rate is expected to reach 6% and beyond next year. Lenders have had to protect themselves from this uncertainty by withdrawing their products from the market until the dust has settled and they can make rational decisions on their own pricing again. Anyone who is more than 7 months away from their current deal ending doesn't have many options to secure a new rate without incurring early repayment charges (ERC's) but even then many are committing to these ERCs just to have the assurance going forwards. If you can afford the monthly payments then there is no reason not to still go ahead and buy a property in my opinion, as long it is the right time for you to buy personally. There is now a higher risk of property prices falling but the market has shown such resilience historically and now is a good time to haggle house prices, too. People in existing chains should be careful not to rock the boat too much, though, as there is more chance of it falling through all together. For anyone who is struggling with increased monthly payments you should follow this process: firstly assess all of your outgoings and cut back on anything that is not essential; secondly, speak to a broker to see if it makes sense to extend your mortgage term to reduce your payments; and finally, consider if there are ways that you can be more economical such as reducing energy and fuel use.

What has changed this week? What does this mean for home-owners and would be buyers? Mortgage rates jumped significantly throughout the week, and many lenders decided to withdraw temporarily from the market to assess the situation and focus on getting deals already in the pipeline offered. There is nervousness in the market, but we expect this to settle down over the coming week. My fixed-rate mortgage ends in the new year - can I do anything now? We are speaking with clients 7 months prior to their expiry, as well as actively discussing whether it is right and appropriate for them to pay their early repayment charge and remortgage early. Some lenders will offer 6-month remortgage offers, and as such this gives some security over that period, and completion of the remortgage can be set for the last days of the offer, enabling borrowers to stay on their current rates as long as possible before incurring the penalty. Is it worth moving it if there’s an early repayment charge? The answer to this can only be "maybe". Borrowers need to discuss with a broker the costs and benefits to remortgaging early. For some borrowers, it is very clear that they should, for others a wait and see approach whilst maintaining their current fixed rate might be the most suitable way forward. I am ready to buy somewhere - should/can I apply for a mortgage now or wait? You can apply for mortgages now. There are deals available across all the loan to values that you would normally expect to see. If you are committed to buying a property, then getting an application that is affordable to you underway sooner rather than later makes sense. Should I renegotiate the price I’m paying for a home? This is really tricky, and poses some serious risks to you. Whilst a vendor may agree to a price reduction that would work for you, there is of course the possibility that the vendor decides to withdraw from the sale full stop. Most lenders will not allow you to transfer the mortgage offer to a new property, although some do, so again check with your broker. Your attempt to save some money on the purchase price may see you walking away from an interest rate which has been offered to you, and is currently a distant memory in the market place. My mortgage is going up and I can’t afford it - what should I do? The first port of call is to seek advice on the mortgage, and what can be done. What options are open to you, such as extending the term, or downsizing your property and mortgage. If you have sometime until this will happen, try where possible to make lifestyle and expenditure changes to free up some disposable income. It is worth noting that all mortgages taken out in recent years will have been assessed as affordable at application on rates of approximately 6%-7%. However, where this assessment falls down is when lifestyle changes occur, such as adding to your family, or the addition of unsecured debts for new cars, for example. Then the disposable income shown on the application may have been removed by increased lifestyle expenditure. In the absolute worst case, where you cannot make your payments, communicate with your lender. Try to pay something, and assess the hierarchy of the costs you have.