Mortgage Rate Rises

[dirtychinchilla]

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.

I've always used a broker. He just knows exactly how to do things, and it's not like a mortgage is a cheap purchase. I'd get advice for spending £1,500, never mind spending £1,500 per month for 30 years or whatever!

A third to add - they know how the products function. For example, we needed some flexibility in terms of early exit from the mortgage. I wouldn't have picked up on that had I done it myself.

 

[matt100]

Because i want to get the balance down a bit, its thats simply really,

the longer i leave it, the more interest i will be paying?

Also, there could potentially be something that will be changing in my current workplace (beyond my control) in a couple of years

If there's something changing at work you'll be far far better having readily accessible savings.

 

[DJMK4]

Again this is feeling. And absolutely if it's a struggle there's a lot to be said for peace of mind.

But mathematically, It isn't really any difference to paying that overpayment month on month.

But yes. It's quite common people struggle with it.


As a similar, smaller, example I pay 400ppm into my regular saver (6.25pc)at the end of the year I will have about 5k in there. At the end of the term I will just drop the entire thing into paying off 0pc credit card I took out to pay for my years holidays.

That way I'm earning 6pc on the money I use for my yearly holidays. I like to do this every year. But I will dump the entire savings amount onto that credit card. Just because it's a large number means nothing to me. It's just in a big pot of cash vs debt that's allocated to me

But I have always been very emotionally detached from money stuff.

I have been utilising ISA which is maxed ( which was high but is now falling) I have a 5% chase account which I can pump money in to and have been but I can't earn more than £500 in PSA

Once I'v got the chase savings account earning as much interest I would want for the remainder of the year then the alternative is non ISA based stock and shares or like you say pension. But these are long term. I was to atleast shave 10-20k off the mortgage. Or atleast try and overpay by double

 

[matt100]

There's always premium bonds if you want tax free savings.

 

[b0rn2sk8]

Typical returns on premiums bonds are about half a good savings rate which is about 1/3 lower than a stocks and shares product. You are usually better off paying the tax unless you are hitting some of the more obscene marginal rates.

 

[matt100]

Typical returns on premiums bonds are about half a good savings rate which is about 1/3 lower than a stocks and shares product. You are usually better off paying the tax unless you are hitting some of the more obscene marginal rates.

Yes but it's basically cash is my point.. he's saying there are changes at work.. I take that to mean something that could reduce or stop his income.

 

[DJMK4]

Yes but it's basically cash is my point.. he's saying there are changes at work.. I take that to mean something that could reduce or stop his income.

No this is not the case , it's just a ride it and see scenario. I do good work for them and we'll respected so hopefully something comes of it

Anyway the discussion was around mortgage overpayments

 

[matt100]

No this is not the case , it's just a ride it and see scenario. I do good work for them and we'll respected so hopefully something comes of it

Anyway the discussion was around mortgage overpayments

Yes but your question makes no sense so it's hard to get you an answer.

You say you need to pay off a certain amount, you're not making sense why.

You're saying it's something to do with changes at work which are against your will. Then make it sound like a promotion or something. Also makes no sense.

So the correct answer to your question is yes, no, do, don't, pay more, save it, invest it, spend it.

Just like some AI slop your prompt is bad so the answer is nonsense.

 

[Hagar]

I have always prioritised mortgage repayment over savings. Maybe that is just feelings but once the mortgage is done the savings or expenditure can balloon as you see fit. I would be uncomfortable leaving a large lump sum to be paid out of a pension.

 

[Penfold101]

Like everything financial, it’s a balance - yes you should have some savings of an amount particular to your needs. A few months salary as a minimum, maybe 10k cash easily accessible plus some long term, but if you’re getting up toward the limit the government will guarantee (80k) then there’s definitely better uses like reducing the interest you’re paying on the mortgage.

You can view the mortgage as just a standard monthly payment that will always be there like Feek’s, with no concern about the amount left to pay as it’s so large as to be meaningless. You’re just paying that monthly amount till the end of time and that’s it - enjoy the house.

If it’s in the realms of possibility that you can pay it off significantly early then it’s worth looking into so you can enjoy your full monthly salary and have some peace of mind whilst saving some interest too.

At the same time there’s no point in living an destitute life for 15 years throwing everything you can at the house while eating beans on toast on doing nothing else with your life, only to get run over the day after you pay it off.

There’s no right or wrong answer really, it’s just down to individual tastes as to what makes you feel better and having a life you enjoy. I’m more thankful I actually have a property at all given the absolute insane cost of them these days

 

[DJMK4]

I dont like making people aware as its personal, but lets say my mortgage balance is £129k,

at the moment, i have around 5k less than that figure above in savings

so..

going back to the mortgage overpayement


I worked out (using the money saving expert calculator) if i may a yearly £6500 overpayment to the mortage, which at the moment is 22.10 years in term and im paying £710 per month no overpayments currently

if i overpay £6500 per year this will reduce the mortgage from 22.10 years to 11 years looking at the graph.


£6500 is probably 2 months worth of savings

 

[matt100]

So you're saying you have almost your whole outstanding balance in savings?

 

[DJMK4]

So you're saying you have almost your whole outstanding balance in savings?

almost, but i dont want to pay it off now in one go as i wont have any emergency funds, it would wipe me out completely

Also, my house is only a small 2 bed mid terrace place, its not the biggest, i dont know if i would need to move either to get more space or if i had to re-locate for work purposes

The house has actually done quite good since i purchased it, back in 2018, i purchased for £170 and its now worth about £240 I think , so an increase of about £70k

 

[matt100]

Again none of what you're saying makes sense.

If you're paying £710 and saving £3200 then add in food etc then you're being paid around £5k per month and therefore earning around £90-100k PA

If you paid your mortgage off in full you could save £4k per month and own a £200k+ asset outright in case you needed to borrow against it.

But you're fretting about overpayment.

To be honest with that balance of income Vs mortgage the advice is the same. Yes/no/do/don't it really doesn't matter because in cash terms you're rich.

Worry about something else, there's nothing to see here.

 

[matt100]

Meanwhile you're unlikely to get an interest rate on savings higher than your mortgage rate so in real terms the most profitable thing you can do is pay it off. It's actually better than saving. Simple maths.

 

[DJMK4]

Again none of what you're saying makes sense.

If you're paying £710 and saving £3200 then add in food etc then you're being paid around £5k per month and therefore earning around £90-100k PA

If you paid your mortgage off in full you could save £4k per month and own a £200k+ asset outright in case you needed to borrow against it.

But you're fretting about overpayment.

To be honest with that balance of income Vs mortgage the advice is the same. Yes/no/do/don't it really doesn't matter because in cash terms you're rich.

Worry about something else, there's nothing to see here.

I dont earn as much as above no


Also living alone i dont tend to spend a lot

If the savings rates (ISA etc) were still high, then i would, i will maximise my PSA, however this again is only £500.


As savings rates are coming down, the key rule is, if your mortage rate is higher than your savings rates, then the advice i can see online is start paying some down on your mortgage


if your savings rates are higher than your mortgage then pay in to savings.

 

[matt100]

I dont earn as much as above no


Also living alone i dont tend to spend a lot

You have to. If you're saving potentially £3200 a month and paying £710 on a mortgage you're already at £4k. That's already about £70k assuming no food, entertainment or pension contributions.

Or you're not saving £6500 in 2 months.

Again, it's simple maths.

 

[DJMK4]

You have to. If you're saving potentially £3200 a month and paying £710 on a mortgage you're already at £4k. That's already about £70k assuming no food, entertainment or pension contributions.

Or you're not saving £6500 in 2 months.

Again, it's simple maths.

It depends, i do on call and overtime, so this can fluctuate

without that, my base salary is around £65k, with on call, overtime, bonus etc then its abit more than this

not giving the actual figures

 

[Penfold101]

It depends, i do on call and overtime, so this can fluctuate

without that, my base salary is around £65k, with on call, overtime, bonus etc then its abit more than this

not giving the actual figures

You have nothing to worry about - a large proportion of the country have less than a few months salary as emergency savings and live in very uncertain circumstances.

You are in a life of luxury.

Go and pay half the house off and then book a holiday or something, there’s no point dying the world’s richest person.

 

[200sols]

Typical returns on premiums bonds are about half a good savings rate which is about 1/3 lower than a stocks and shares product. You are usually better off paying the tax unless you are hitting some of the more obscene marginal rates.

Outside of some niche situations like those monthly savers offering 7% unless you are a basic rate payer its almost never worth paying the tax compared to the alternatives like low coupon gilts or premium bonds. With a decent chunk in premium bonds the average person will get the average rate which is 3.6% right now which is not half of a good savings product.

Your calculations on stocks vs cash seem a bit off as well.