I've got about 75k left.
Might save up a few k and overpay and take it off the term, should go someway to reduce the hit come remortgage time.
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
Might save up a few k and overpay and take it off the term, should go someway to reduce the hit come remortgage time.
Was just quoted 8k to knockdown and replace my old flat roof porch. It's tiny, getting 2x more quotes and I'll see just how much I'm being ripped off. First world problems but it's why I do a lot of minor electrical and plumbing work myself for years now.
I reckon they will have started to come down by then but they'll still be high compared to what they were. Presumably they will drop it back gradually once the inflation is under control.
One issue is the general election in 2025, we could well have a labour government.
Good idea fixing in a 5 year 5.59% rate currently or going 2 year base rate tracker at 5.29%?
I have a feeling in 2 years the rates are only going to be higher.
This is going to be painful as my 2.21% 5 year fixed rate comes to an end on 1st Jan but thankfully Ive been overpaying so there’s only 100k left to pay.
The 5 year fixed I can probably overpay too so its almost paid in 5 years (maybe ~10k left at the end)
I have a feeling in 2 years the rates are only going to be higher.
This is going to be painful as my 2.21% 5 year fixed rate comes to an end on 1st Jan but thankfully Ive been overpaying so there’s only 100k left to pay.
The 5 year fixed I can probably overpay too so its almost paid in 5 years (maybe ~10k left at the end)
Associate
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Advice I saw from Martin Lewis on fixing is all about affordability (and it's essentially a gamble). All depends on what's more important to you - stability and same payments with no chance of changing or gambling in the hope it'll drop. Personally if I could afford the 5yr fix i'd take that one and overpay as there's always the chance rates can go up.
If that’s the size of your mortgage (which isn’t a lot in the grand scheme of things) then I wouldn’t sweat it tbh - if you’ve been overpaying your mortgage then I doubt you’re in a position where a couple of % here or there will be life changing.
It’s a complete gamble, nobody knows, either option could end up better / worse.
Thanks both, thought as much.
My initial plan a few months ago was a 5 year fixed rate, 5 year term to fully pay it off. But that would have cost £1857 / month at 4.34%. Cost of deal £11,749. However that certainly might leave me short, or I wouldnt be able to afford anything like holidays, events or emergencies.
So I looked at a 5 year fixed, 10 year term. That was £1028 / month at 4.34%. Cost of deal £17,441
The same 5 year fixed, 10 year term now at 5.59% costs £22,725 - £1089 / month. Total cost of deal is £5,284 more than a few months ago.
But yes, thankfully I'm not scratching down the sofa for every £1 so an increase* of £61 / month is hardly life changing
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Not having anything left for emergencies isn't a good idea to be honest! Unless you've got really good insurance or your family can bail you out, worst case is boiler dies and needs replacing, cambelt snaps and you need a new car or your house surges and you need new electrical appliances (hopefully, never at the same time!) and you're now looking at some expenses you can't afford.
Yes, thats why I scrapped off the idea of 5 year fixed, 5 year term and went for 5 year fixed, 10 year term with the options of overpaying to a point where is was ~10k left at the end of 5 years (if heavily overpaying of course)
Flexibility when things arise - which they inevitably do
Soldato
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How is it taking advantage, you ask for a quote you get a quote, if you don't like it just do it yourself?
Fixing is not a gamble, not fixing is. If you are looking at the numbers and you can afford to, you should fix for a long time, were interest rates to fall, you can remortgage, from what i see, there is no penalty after only a few years.
Seems to me the majority of people here are basically traders on the interest rate.
You should be overpaying like mad now surely? Our 1.24% fix ends in 2026. Fortunate to have been overpaying a little since we took it out but once our renovations are done we’ll start overpaying more seriously. But even overpaying £1k/month for 3 those years and fixing them at todays rates would mean we’ll pay more every month in a new deal. Crazy
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Soldato
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If you're fixed at a 1% rate its better to save your overpayments into a higher rate account and then make a lump sum payment as the fix ends surely?
I imagine the only reason you might not want to do this is if you are hitting the limits of 10% or whatever your overpayment limit is.
Almost one million households face £500 a month mortgage hike, Bank of England warns
The bank's Financial Stability Report says households and businesses are proving resilient in the face of cost of living and interest rate challenges.
news.sky.com
Why are they warning about something they are causing?
Go check out the Martin Lewis overpayments calculator and look closely at the capital left after X years (when your term ends). For us, saving or overpaying £1k per month ended up much the same. So we’ll save the admin hassle and bung it straight into the mortgage. Compound interest is a powerful thing, especially on a big loan.
It’s definitely not as simple as X% rate being more than Y% rate.
Soldato
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It kind of is that simple though.
If you overpay £1000 per month on a mortgage at 1.24% for 3 years (until 2026) you would better off putting that £1000 per month into a savings account at 5% (rough fixed term rates currently) for 3 years.
Yeh, thats too much.
My mortgage is £834 but ive been overpaying recently by £1000 or £1500 / month. Bills and service charges are about £500 / month so im around that mark - but that's with £1500 / month overpay. I'll fault on that this month as have had to buy a new washer dryer that packed in and have been to 2 weddings and paid for a short break holiday next year.
GF covers all food and social each month which covered the weddings