Mortgage Rate Rises

[jaybee]

I've had a chat with a broker over mine and they've been talking about 3.89% ish over 2 years.. we're at 70% LTV.

Then I went and looked at Nationwide who we're already with and their rate (not related to being an existing customer) is 3.85%.. it's made me wonder as an entirely vanilla borrower (which I haven't always been to be fair) is there any point in a broker?

The main arguments for using one I think are:

TIME
Some people just cba to even think about this kind of stuff and don't want to spend energy/time on it. They don't trust themselves to find a good deal, nor can recognize one anyway. So they hand it over to a "pro" to do all the work.

ACCESS TO "SPECIAL" RATES
Time and time again I hear of brokers being able to access rates which Joe Public can not. How much truth in this...don't know. From personal experience when we first bought, we had a broker work for us included free with our Estate Agent handling our buy. They ended up recommending HSBC who I also found through my own quick research to be the best for us as well. Only difference was that the broker got a finders fee cut when it all finally went through.

 

[Dup]

I've had a chat with a broker over mine and they've been talking about 3.89% ish over 2 years.. we're at 70% LTV.

Then I went and looked at Nationwide who we're already with and their rate (not related to being an existing customer) is 3.85%.. it's made me wonder as an entirely vanilla borrower (which I haven't always been to be fair) is there any point in a broker?

I went 2 years A becasue it was a little turbulent still then, and also becasue my partner had credit file issues we couldn't resolve in time.

The brokers in the case of the poor credit file could query more favourable lenders as the big banks would not quote us with her on it. I'd have never of known how to find those and it would have given us an option if we really needed it. Luckily, I could get the going rate with just under 80% LTV on my own for a short term instead of losing the house we wanted. Now we're equals and have the same LTV more-or-less. Putting her on has increased the solicitor costs somewhat but it's a big deal for us to both be equals as she's fought a long battle to be in career and financial the position she's in.

I otherwise can't see the value of the broker. I'm educated enough to fill out the forms accurately, but like jaybee says there's an attraction to not having to spend time doing that for a few hundred quid. I loathe forms, especially when they're not always digital.

 

[slinxy]

Is there an online calculator to work out if it's worth switching a mortage when you have to pay a plenty fee?

 

[DJMK4]

Ok I have work out a strategy to pay down a £129k mortgage balance.

Beginning of tax year - if savings rates are high save in to savings. If mid to low save in to savings max ISA . Then on 4 months during that tax year overpay mortgage lump sums per month of £3500 ish (which should equate to £12,800) per tax year

Outside of those 4 months of overpayments which could be one after the other or

Save (month)
Mortgage overpayment (month)
Save (month).
Mortgage overpayment (month)
Save (month)
Mortgage overpayment (month)
Save
Mortgage overpayment (month)
Save (month)
Save (month

Etc

If I allocate 4 months per tax year to overpay in lump.sum then that's £49,600 in say 4 years


I don't know what to do invest Vs paydown mortgage. I have decent savings behind me now so want to where possible use some months where I have maxed out savings etc to pay some lump sums on the mortgage each year over 4 months per year

 

[Hawk Tuah]

Our re-mortgage is due end of September. Have been watching rates slowly go down over the past year, and the Nationwide site says they'll be lowering their rates in line with the recent BOE rate drop on 1st September. I'm leaving it a bit last minute to accept the online renewal, but we've got about £340k outstanding on the mortgage, so every little % drop counts.

Not sure whether to go 3 or 5 year though. It'll be a gamble either way.

 

[slinxy]

Ok I have work out a strategy to pay down a £129k mortgage balance.

Beginning of tax year - if savings rates are high save in to savings. If mid to low save in to savings max ISA . Then on 4 months during that tax year overpay mortgage lump sums per month of £3500 ish (which should equate to £12,800) per tax year

Outside of those 4 months of overpayments which could be one after the other or

Save (month)
Mortgage overpayment (month)
Save (month).
Mortgage overpayment (month)
Save (month)
Mortgage overpayment (month)
Save
Mortgage overpayment (month)
Save (month)
Save (month

Etc

If I allocate 4 months per tax year to overpay in lump.sum then that's £49,600 in say 4 years


I don't know what to do invest Vs paydown mortgage. I have decent savings behind me now so want to where possible use some months where I have maxed out savings etc to pay some lump sums on the mortgage each year over 4 months per year

Why don’t you just put half into your savings and half to the mortgage?

Automation is the key.. interest is worked out daily, so by delaying the mortgage payment, you are just getting charged more interest.

At the end of the year, lump sum what else you can afford.

 

[jaybee]

Is there an online calculator to work out if it's worth switching a mortage when you have to pay a plenty fee?

This might help

It reckons currently for me, rates would have to get to about 3.35% for it to be worth ditching a 2 year fix with 1 year 11 months remaining, assuming new one has a £999 fee and the ERC is 1%. I don't know what my ERC is so guessed it was 1%.

 

[DJMK4]

Why don’t you just put half into your savings and half to the mortgage?

Automation is the key.. interest is worked out daily, so by delaying the mortgage payment, you are just getting charged more interest.

At the end of the year, lump sum what else you can afford.

I'll take a look

I have just done a money saving expert mortgage calculator. It says if I can meet a target of overpaying the mortgage by up to £12 per year..I should have it paid off by year 7 or so Instead of the 22 years remaining

That obviously depends if life doesn't throw you crap along the way

 

[tamzzy]

Ok I have work out a strategy to pay down a £129k mortgage balance.

need to know:
1) mortgage interest rate
2) savings interest rate
3) basic/higher/additional tax payer
4) pension contributions (assuming you do pay into one, and whether you are close to hitting the £60k/yr limit)
5) (any money in premium bonds)

this is what i do, and makes sense in my head:
i normally have £20k already saved up before the start of the tax year (ie the year before), so when april 6th comes round, that £20k gets put into an ISA straight away - either cash or S+S +/- LISA (whichever your preference, basically any ISA so the taxman don't get their grubby hands on it)

from april 7th the saving starts for the next tax year already
as the savings interest rates are higher than my mortgage rate...i save first (basically saving for the next tax year's ISA dump)
about £250/month goes into a GIA
about £700/month goes into regular saver accounts
(add additional pension contributions here if you need to)

i'm not overpaying my mortgage early as even after the PSA is used, the interest % on savings account *currently* is higher than my mortgage % - though this may change now that interest rates are dropping
I've also maxed out PB (if you haven't maxed premium bonds it's another way of putting liquid cash aside that won't be touched by the taxman)

 

[unwashed potato!]

If you pay a lump sum between renewal, are there any fees/amount that goes to the interest? I hate that if I pay £25k now during my term with the 10 percent yearly fee free allowance , my mortgage doesn't drop £25k.

 

[tamzzy]

If you pay a lump sum between renewal, are there any fees/amount that goes to the interest? I hate that if I pay £25k now during my term with the 10 percent yearly fee free allowance , my mortgage doesn't drop £25k.

most lenders put the full overpayment towards the principal
so £25k overpayment = £25k off the mortgage principal and none to servicing the interest

 

[413x]

Thought we recently had ours is 187k left on our first home at 1.9%

I will never extend the mortgage/buy a more expensive house. Luckily I want to live in a cheaper area.
Job security means us extending that mortgage would be irresponsible.

If it gets to 2027 and Rate arw under 3pc I'll be happy enough

 

[DJMK4]

need to know:
1) mortgage interest rate
2) savings interest rate
3) basic/higher/additional tax payer
4) pension contributions (assuming you do pay into one, and whether you are close to hitting the £60k/yr limit)
5) (any money in premium bonds)

this is what i do, and makes sense in my head:
i normally have £20k already saved up before the start of the tax year (ie the year before), so when april 6th comes round, that £20k gets put into an ISA straight away - either cash or S+S +/- LISA (whichever your preference, basically any ISA so the taxman don't get their grubby hands on it)

from april 7th the saving starts for the next tax year already
as the savings interest rates are higher than my mortgage rate...i save first (basically saving for the next tax year's ISA dump)
about £250/month goes into a GIA
about £700/month goes into regular saver accounts
(add additional pension contributions here if you need to)

i'm not overpaying my mortgage early as even after the PSA is used, the interest % on savings account *currently* is higher than my mortgage % - though this may change now that interest rates are dropping
I've also maxed out PB (if you haven't maxed premium bonds it's another way of putting liquid cash aside that won't be touched by the taxman)

My current mortage rate is 3.95% fixed for another 2 years 10 months . Total term 22 years 10 months

Saving interest rates are trading 212 ISA now 3.85% chase where I can only earn £500 interest without being taxed is 5%

I'm a higher rate tax payer

Company pays 12% although i don't contribute at the moment. Pension is around £60k I think and have let's say abit less in my savings stored than my mortage balance.

If I can save / invest and also meet a £12k overpayment per year strategy I should have the mortgage paid off in 7 years from now I think. If I stick to it and nothing happens in life. Which it will

 

[tamzzy]

Company pays 12% although i don't contribute at the moment. Pension is around £60k I think and have let's say abit less in my savings stored than my mortage balance.

i would contribute extra to the pension as that's 40% relief, yes you'll have less take home pay but looking long-term, that's an easy win right there

 

[DJMK4]

i would contribute extra to the pension as that's 40% relief, yes you'll have less take home pay but looking long-term, that's an easy win right there

But what about the mortgage ? I want to atleast take a quarter off it .or half in the next 2-5 years

 

[tamzzy]

But what about the mortgage ? I want to atleast take a quarter off it .or half in the next 2-5 years

i'm not saying don't, all i'm saying is that if i were you, i'd put some into the pension too.
even £100-200 month extra adds up over the years esp with the 40% tax relief, more so than putting that same £100-200/mth into mortgage overpayments

 

[DJMK4]

i'm not saying don't, all i'm saying is that if i were you, i'd put some into the pension too.
even £100-200 month extra adds up over the years esp with the 40% tax relief, more so than putting that same £100-200/mth into mortgage overpayments

I will start looking at this thanks. They will increase it a little I think .

I still have no idea if I will move home in the future.

Sorry just having a bit of a mid life crisis wobble since they started cutting savings rates

 

[silversurfer]

The theoretical 10% would be to get people to actually buy our debt. I.e big risk premium.

Yep basically thats what Im mentioning. Its illusion to think there is a choice in setting rates, not by government or the Bank of England itself. The market sets the rates, UK is relatively lucky overall but I think even the golden child in USA debt could suffer.

Its not my personal wish or a desired outcome but nobody is reducing debt, its this scenario or bigger inflation but hope Im wrong as it would rip off the plaster in uk reliance on debt that is normal in the west.
I used to set my savings at 10% for five years guaranteed, house debt was above that and Im not actually a hundred, it wasn't too long ago in the big scheme of things. We exited ERM the predecessor to the euro by force around that time etc.
Knowing Japan Yen is a mess, euro dollar all bad shape, china is selling dollar buying gold they were previous largest debt holders so ask their verdict; I dont see long term low rates especially

 

[regulus]

I'd probably sell now and lock in the gain if I needed liquidity as soon as November. We're within a percent or two of all time highs and that could easily change.

Just responding back to this about 2 months after the fact, almost literally to the day. More to myself as well too. Just as well I didn't sell in June as I've blown past the June 9th amount by about 27.6k.

Do I sell now or roll the dice again?

 

[silversurfer]

Hire an IFA if you want real advice, if its bad advice you can sue them for the cover they must have professionally I think anyway. Autumn is stormy in markets, can be a good storm but hard to say till we get through it. You have to measure your conviction, why cant you scale out etc.
AI seems to be repeating fair advice, a certain sale date is to be avoided like in pensions they will scale assets to avoid volatility vs retirement and using the cash. In 2008 it was a common news item, people said I cant retire I stayed in the market and it dropped ; well if you knew it was needed, dont be in a (fast) market as -20% is normal movement.