A father-of-two with a mortgage deal about to come to an end is faced with the terrifying choice of a £3,000 fee to exit early or the prospect of “serious financial difficulty” next year.
John Battersby, 35, said he called his mortgage lender NatWest on Monday, as the markets went into meltdown, to discuss what options he had as his deal comes to an end next July.
Several mortgage lenders, including Halifax, Virgin Money and Skipton, have suspended lending to new customers over fears that funding loans will be too expensive as the markets fear the base rate could rise to six per cent next spring in the wake of the Government’s mini-Budget last Friday.
“We either pay a huge fee to exit early or we sit and wait and probably get into serious financial difficulty in nine months time.
“This is as a scary a moment as I have ever had.”
After speaking to his lender, Mr Battersby, from Stockport, discovered he would have to pay a one per cent charge for any early exit from his current deal.
On his £300,000 mortgage, this would mean a £3,000 fee.
“The charge is one per cent regardless of when you exit early”, he said. “So I have worked out that if I exit early now it will cost me £3,000 just to have my mortgage go up £300 a month.
“I can extend to 35 years to get that down to about £220 extra a month.”
“So I can pay £3,000 for the luxury of having £200 extra on my mortgage.”
Otherwise, he has to wait and see what happens when his current mortgage arrangement ends next July.
“If interest rates go up to six per cent, as is expected, my mortgage payments will go up by about £700 a month”, he said. “That is simply inconceivable.
“Scary, scary times.”
Mr Battersby, who works as a buyer for a supermarket, said he would probably have to look for a new job to try to meet those repayments, holidays would be out of the question and he and his family might even have to consider moving and downsizing.
“I can’t see what other options there are”, he said. “The people in my shoes who can’t change now as we aren’t within six months but don’t have two to three years left to try and ride this out are the ones in serious trouble.”
Should have thought about that before thinking he deserves to live comfortably.
Going to be a LOT more headlines like this over the next 12 months
I don’t really get what the story is. He’s on a fixed rate mortgage and it’s not reached the end of the fixed rate term. Yeah that’s how they work?
In a way he’s lucky: it could have been worse if he had been a father-of-three though I guess not so bad if he’d been a father-of-one. Makes you think though.
Having bought my first house in the ‘Thatcher Years’ I can assure him that interest rates can go up further.
It does surprise me that people burden themselves with repayments that are near the cusp of affordability – and an interest hike means they can’t afford it. Prudence should always be a priority when committing to such an amount over such a long time. Indeed the world can go to shit, as some people are about to find out.
Father-of-two, Mum-of-three, Grandad, Pensioner… Why? Is this the tabloid version stepmother/father/sister/brother porn?
This is why I have never paid more than 3x my salary for a house.
It’s meant smaller houses than I might have been able to afford but leaves some leeway now.
This is a complete non story since this is how ending a fixed deal works. Anyone too stupid to realise that was too stupid to be allowed to take out such as big borrowing such as a mortgage until they are financially literate enough to know what they were getting into.
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A father-of-two with a mortgage deal about to come to an end is faced with the terrifying choice of a £3,000 fee to exit early or the prospect of “serious financial difficulty” next year.
John Battersby, 35, said he called his mortgage lender NatWest on Monday, as the markets went into meltdown, to discuss what options he had as his deal comes to an end next July.
Several mortgage lenders, including Halifax, Virgin Money and Skipton, have suspended lending to new customers over fears that funding loans will be too expensive as the markets fear the base rate could rise to six per cent next spring in the wake of the Government’s mini-Budget last Friday.
“We either pay a huge fee to exit early or we sit and wait and probably get into serious financial difficulty in nine months time.
“This is as a scary a moment as I have ever had.”
After speaking to his lender, Mr Battersby, from Stockport, discovered he would have to pay a one per cent charge for any early exit from his current deal.
On his £300,000 mortgage, this would mean a £3,000 fee.
“The charge is one per cent regardless of when you exit early”, he said. “So I have worked out that if I exit early now it will cost me £3,000 just to have my mortgage go up £300 a month.
“I can extend to 35 years to get that down to about £220 extra a month.”
“So I can pay £3,000 for the luxury of having £200 extra on my mortgage.”
Otherwise, he has to wait and see what happens when his current mortgage arrangement ends next July.
“If interest rates go up to six per cent, as is expected, my mortgage payments will go up by about £700 a month”, he said. “That is simply inconceivable.
“Scary, scary times.”
Mr Battersby, who works as a buyer for a supermarket, said he would probably have to look for a new job to try to meet those repayments, holidays would be out of the question and he and his family might even have to consider moving and downsizing.
“I can’t see what other options there are”, he said. “The people in my shoes who can’t change now as we aren’t within six months but don’t have two to three years left to try and ride this out are the ones in serious trouble.”
Should have thought about that before thinking he deserves to live comfortably.
Going to be a LOT more headlines like this over the next 12 months
I don’t really get what the story is. He’s on a fixed rate mortgage and it’s not reached the end of the fixed rate term. Yeah that’s how they work?
In a way he’s lucky: it could have been worse if he had been a father-of-three though I guess not so bad if he’d been a father-of-one. Makes you think though.
Having bought my first house in the ‘Thatcher Years’ I can assure him that interest rates can go up further.
It does surprise me that people burden themselves with repayments that are near the cusp of affordability – and an interest hike means they can’t afford it. Prudence should always be a priority when committing to such an amount over such a long time. Indeed the world can go to shit, as some people are about to find out.
Father-of-two, Mum-of-three, Grandad, Pensioner… Why? Is this the tabloid version stepmother/father/sister/brother porn?
This is why I have never paid more than 3x my salary for a house.
It’s meant smaller houses than I might have been able to afford but leaves some leeway now.
This is a complete non story since this is how ending a fixed deal works. Anyone too stupid to realise that was too stupid to be allowed to take out such as big borrowing such as a mortgage until they are financially literate enough to know what they were getting into.