That's both over 5 years, but he asked for 4 yearsb****r. It's 2.5%.
That assumes
1. Interest only and all payments made on time
2. No capital repayments
3. Rate rises during the first 2 years and then not again (i.e. worst case scenario)
4. NO FEES for either product (or the same fees) and really watch out for those because they make all the difference.
5. That you don't do anything with the money you save in years 1 and 2 - you should be able to stick it somewhere and get a little interest or overpay and reduce the capital
6. That you really meant 5 years not 4
Thank you, yes i'm aware of the new strict rules and i probably would not pass. The figures i've give are deals my current provider as offered and from what i've read you do not need to do another credit check if you keep with the same lender. The 2 offers i mentioned both have no fees they offered 2 more with fees but i didn't want to confuse things further
My calculations were based on interest only as I didn't know the full mortgage amount.
Even staying with your current provider they will still take you through the affordability criteria - I've been there, and wearing the selfemployed t-shirt...Thank you, yes i'm aware of the new strict rules and i probably would not pass. The figures i've give are deals my current provider as offered and from what i've read you do not need to do another credit check if you keep with the same lender. The 2 offers i mentioned both have no fees they offered 2 more with fees but i didn't want to confuse things further
Repayment 28 years left.
It doesn't, as long as you're not borrowing more or extending the term etc and your payment history is OK.
I'm sure it will be fine.
I'm with Nationwide and our current deal is finishing, and they've offered us new deals without fees and no further checks required as long as we don't borrow more, or change the term etc.
They are legally obliged to do the affordability test when you take out a new mortgage product even if you're with the same lender. The only way to avoid it is to stay on the SVR. This is not a credit check.
Does anyone still do annual interest on mortgages? I took out my first 20 years ago, to the month, and that was calculated monthly, the next one four years later was daily.
That article talks about new applications, not changing deals with existing lenders.
Same lender, same amount, same term*.. but we were still taken through the affordability checks. Although no proof was requested - perhaps because the LTV was was c.50% and the loan value vs. income ratio was low. They are obliged to ask the questions, maybe you just didn't notice as it's all rather matter of fact if the initial answers suggest a low risk of default. I believe that if you request an interest only mortgage the check gets a lot more detailed.
Even on a fixed rate the monthly repayment is periodically recalculated. From memory the repayment drops a small amount each year to take into account the reduced outstanding balance and the remaining term.
Great answer, but doesn't answer the original question.
My letter says no credit, affordability or salary checks.
I guess they must be still using the transitional arrangements (not all lenders are), but don't dawdle these run out on 21 March.My letter says not credit, affordability or salary checks.
They assume the interest rate will stay the same for the whole life of the mortgage even though they know it won't. Then they recalculate repayments every time the rate changes and often annually as well (in case there's a small drift).
Thank you for the heads up. I've been doing a little digging and the transitional arrangement is for remortgages who are changing lenders also. I can not find any information on rules regarding the staying with the same lender. I will do more digging as if this is the case i will 100% go with a 5 year fixed.