Posted on 19 April 2012 by Tom
I have a 3.99% 3yr fix of £550k that expires next June (2013). It has a 3% break fee so I can't really break it. I am looking for a 'forward fix' product that will allow me to essentially extend the fixed rate period at current attractive swap rates. Who offers these product other than the private client / wealth mgt divisions of some banks (as I may not fit their criteria). Thanks. Tom
There is no one at the moment who is offering residential mortgages that will still be available for completion in June 2013. Either the products have a drawdown date or the mortgage offer has an expiry date, added to which most valuations are only valid for a period of 6 months. The longest period offers are valid for tends to be 6 months and a handful of lenders will allow these to be extended a further 6 months on a case by case basis.
It is possible to purchase a "Cap" as a way of hedging against future interest rate rises. For the payment of an upfront premium you can select the rate and the timeframe for the Cap and should your own mortgage rise above this limit then it will pay out the excess to you. These interest rate caps are considered a "financial option" for tax purposes and are subject to capital gains tax. You should seek professional tax advice before entering into any such arrangement.
John Charcol can help you arrange an interest rate cap and you should call 0344 346 3672 to speak to one of our advisers.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.