Confused! Yep

Aldaniti

Aldaniti

At the Start
Joined
Dec 21, 2005
Messages
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Location
Wickford
Have just received our new mortgage offer from the Northern Rock, we were on a 4.99% rate (over 100% mort) for three years but that ends this month & they have now offered us a 4.79% rate for the next two years, goody I thought! cheaper monthly payments I thought, but how comes our mortgage payments are now going to be £88 MORE a month :o like to know how they are working that one out :huh:
 
If you were on a fixed rate mortgage for those 3 years and the rates were higher than your fixed rate then, all that happens is they lump what you saved during the fixed rate period onto your mortgage when the fixed rate period is up. Most people seem to think a fixed rate mortgage is about the mortgage supplier gambling on the rate over the fixed period but it isn't.
 
Originally posted by Honest Tom@Jun 7 2006, 12:03 PM
Most people seem to think a fixed rate mortgage is about the mortgage supplier gambling on the rate over the fixed period but it isn't.
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I must admit, I am one of those people.
 
Originally posted by Honest Tom@Jun 7 2006, 12:03 PM
all that happens is they lump what you saved during the fixed rate period onto your mortgage when the fixed rate period is up.
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Could you clarify that bit for me HT? How do they achieve this?
 
Originally posted by simmo+Jun 7 2006, 02:08 PM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (simmo @ Jun 7 2006, 02:08 PM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-Honest Tom@Jun 7 2006, 12:03 PM
all that happens is they lump what you saved during the fixed rate period onto your mortgage when the fixed rate period is up.
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Could you clarify that bit for me HT? How do they achieve this? [/b][/quote]
Not sure of the basics simmo but, you take out a loan, at the end of the fixed rate period you'll have paid so much and you'll still owe the rest. If the variable rate dips below what you're paying during the fixed rate period the difference SHOULD come off your loan.
 
My understanding was that if the variable rate drops below the fixed rate then that's just tough - that's the gamble bit.

Which is why I can't understand Aldaniti's example. Depending on the size of the loan after three years you'd probably owe them just about the same amount as you owed them at the beginning (i'm sure my mortgage was slightly bigger than the original loan amount after three years) - so if you apply a lower fixed rate to it, it should be less. Unless it is significantly more than you originally borrowed - but it would need to be a fair amount.
Although the thought has just occurred to me that it might not be a Capital and Interest repayment???? In which I wouldn't have a Danny about it.
 
I'm getting somewhere now I think!
Our original mort was part secured & part unsecured as we had an over 100% mort to pay fees/stampduty etc etc well it turns out that this new mort offer is a completely secured loan, they have added the unsecured loan to the mort :huh: so they now want £1064 a month for a mort of £175k over 22yrs
 
Nope! we had to tell porkies to get it! :ph34r: its a stuggle but at least the place is ours at the end of it rather than a landlord etc
 
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