Mortage questions
- Thread starter hornetstinger
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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 both in terms of you being better off and also, if something does happen where you'd need cash you've got it readily available rather than needing to re-mortgage (though some mortgages do allow you easy access to take back your overpayments)
There is a cap on the amount I earn interest on for the bank account but I wont reach it over the next 2 year fix on my mortgage.
I just wanted to make sure I wasnt missing anything in terms of different frequencies of calculating/applying interest and stuff like that.
'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.
Absolutely.I'd probably go for the longer mortgage and make overpayments when you can
There is no point busting a gut to pay off your mortgage as early as possible. Enjoy your hobbies, go on holidays, have good meals occasionally, etc, and if cash builds up then stick it into the mortgage. You'll be far happier than the sorts over at Money Saving Experts who feel deeply ashamed when they buy a coffee that they hadn't allowed for in their budget to pay off a mortgage in 15 years.
You don't even have to be that disciplined to make regular over payments. Just set up a reoccuring payment from your bank account to your mortgage account on/or shortly after pay day. Effectively you have made the overpayment before you've even had time to consider spending the money on other stuff.
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.
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.
Soldato
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Longer Mortgage and over payment Everytime .
If things get tough you haven’t overstretched yourself , I’m with first Direct and can overpay whatever I like as long as I don’t fully repay the mortgage within my fixed rate period .
1.97% fixed for 5 years
If things get tough you haven’t overstretched yourself , I’m with first Direct and can overpay whatever I like as long as I don’t fully repay the mortgage within my fixed rate period .
1.97% fixed for 5 years
Agree about having a longer mortgage and making overpayments if you choose/if possible. It’s a good idea to quote the deposit percentage you had when quoting the mortgage you have, otherwise it’s a bit meaningless. Those with 40% deposits are obviously going to get stonking deals.
Soldato
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Soldato
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I just did a 15% deposit and got 1.41% fixed for 2 years. The fact it's a 25 year mortgage is irrelevant as not only do I intend to overpay with a lump sum at the end of year one, but I intend to do another fixed deal along with an overpayment at the end of year 2.
I'll keep going for 25 year durations as long as they agree (I'm 42 right now). The logic is that I'll always have a low commitment and always have the best interest rate. The first year I'll be restricted on my overpayment, but on the second year I can plough in any amount I like as I'm effectively putting down a new deposit on top of my growing equity. My overpayment/deposit is held in an ISA as I save what I can throughout the short term, and if I need access to that money in an emergency then I have it.
Oh, I definitely agree. Which is why I said:
It's up to the inidividual to decide what that is. A year as you say would be crazy - potentially - and 60 years could be great. As always, the best is somewhere in the middle and commensurate with the individuals requirements.
I view the lowest overall payable figure as the one to go for when you factor in lifestyle etc.
1.49% above base rate, so 1.74% at the moment. A life time tracker (I should have mentioned, but I guess you could work that out from my post)
Bank HSBC. This was 2 years ago and I did have a decent deposit. You can get close to this now. A quick search shows 1.84% above BoE looks to be the best atm.
So you can get better fixed rates, but re-mortgaging every 2-5 years with the potential fees involved can make them more expensive if your mortgage is small. I can always change my mind and go for a fixed deal if I think it's a better option. But at the moment I can't see rates going up that much in the next few years.
Soldato
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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.
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.
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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?
Soldato
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They'll sell a £300 item for £500 and offer "interest free" payments. It's a con.
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When you set up a mortgage, and use the online features, is there a method of paying the right amount for the 10% or do I have to work it out myself (and risk overpaying)
Worked out with £120K house, 41K deposit, 2.3% fixed for 2 years, 3.75% after that, 20 year £410 a month, pay extra £170 a month, mortgage 9 years 9 months, saving £19k in interest
Worked out with £120K house, 41K deposit, 2.3% fixed for 2 years, 3.75% after that, 20 year £410 a month, pay extra £170 a month, mortgage 9 years 9 months, saving £19k in interest
Soldato
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What do you mean?
Is your mortgage type fixed that you can overpay 10% a year?
10% of what, your payments, or the overall value, or the remaining value?
Is your mortgage type fixed that you can overpay 10% a year?
10% of what, your payments, or the overall value, or the remaining value?
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I think fixed may be better (for now) I guess variable means exactly that it could go >5%
Say if I pay 10% allowance for the year but in monthly installments, ie £400 mortgage then £150 per month extra (I guess that £150 will change as time goes by)
Is there a option to do that, £400 mortgage is DD of course then £150 (or whatever done if login and it'll display what I can pay every month without a charge.
Say if I pay 10% allowance for the year but in monthly installments, ie £400 mortgage then £150 per month extra (I guess that £150 will change as time goes by)
Is there a option to do that, £400 mortgage is DD of course then £150 (or whatever done if login and it'll display what I can pay every month without a charge.