Is this as simple as just comparing the headline interest rates?
My bank account offers 3% interest on savings and my mortgage rate is currently 2.29%, so I'm better saving rather than overpaying?
essentially - I'd check the details re: how that savings account interest is paid - presumably there is a cap on the amount it is paid on, is there a floor too? But basically earning 3% interest on XX,XXX vis losing -2.29% interest on the same amount through a larger mortgage is a no brainer
30 year mortgage £327 per month - £117,720.00 + £40k = £157,720.00 (The idea of paying an effective rate of 40% on a loan seems bonkers to me).
Find £550 a month, have a 15 year mortgage - £99,000 + £40k = £139,000.00 (an effective rate of 16%)
Absolutely.I'd probably go for the longer mortgage and make overpayments when you can![]()
I went for a BoE tracker (23.5 Y) as we are likely to to have low rates for some time in my opinion . But if it does look like changing I have the option to re-mortgage to a fixed rate at any time.
Assuming the BoE rate doesn't go up to much I'll stick with it. There's no added cost of looking for a new mortgage every 2-5 years.
The tracker gives me a flexibility to overpay any amount. I do have a relativity small mortgage so potential fees when remortgaging have a bigger effect on the overall cost.
Those with 40% deposits are obviously going to get stonking deals
'Effective rate' as you describe it is pretty meaningless though because it doesn't take into account the time period. If I borrow £100k and pay back £115k after 1 year that is an 'effective rate' of only 15% but that doesn't make it better than the above options, it is massively worse. Equally borrowing £100k and paying back £150k after 60 years would be a 50% 'effective' rate' but actually a great deal.
Biggest deposit possible with the shortest mortgage, within reason.
What rate above base did the bank offer you?
Which bank?
1.49 is certainly worth takinf for the term, the added advantage is trackers do not tend to have any issues regarding overpayments as well.
I have a 0.69 above base on one subloan part of one of my mortgages, and I will never ever touch it.
Contrast that with the buy to let mortgage hilarity, and they are 3.5% above base or the equivalent in fixed, nasty.
Could you take out a mortgage with the same people that do Brighthouse interest free finance lol
I always thought they had massive interest rates, didn't realise they do interest free credit! Or is it just that not many people qualify for interest free and end up with large rates?