Mortgage Rate Rises

MatsyLR said:
More like keeping up appearances and people who have engrained poor money management.
To me people are more well of than they think they are once they cut out unnecessary noncense from there life. But many have become acustomed to daily greggs/starbucks coffe or eating out every other day, drinking, smoking and buying cloths every other week and giving that up means they are in poverty.

Once I factor in all bills inc a £300-400 mortage my bills would come to no more than around £1000-1100 per month leaving around £200-300 left over each month on a £20k job. This in the north east.
I am one of the lucky ones who has a "large" deposit growing by £1k every month while I'm trying to find a house so I can for the most part offset these increases (for the time being.....), but it still sucks. Currently a 25 year mortgage works out to £315 based on the house price range I am looking at with an interest rate of 5%. That same mortgage would have been £200 per month at the start of the year :mad:
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It would be over £2000 a month down here in the South East if some of us remortgaged today.
 
Our absolute baseline expenditure is £2,900, once factoring in the energy price rises.

This is after whittling groceries down to £75/week, and reducing pet food spend by 66%.

Life insurance + home insurance + car insurance + pet insurance is £300, and that is after me switching to the best deals I could.
 
vail3r said:
I'm staring to really worry when my 2% fix is up in Aug next year, seems like its going to land literally at the worst point.
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So **** how it's just luck of the draw with things like this. All very well some people saying you take risk or not when you choose to fix and how, but in reality, 95% of the time it's just pure dumb luck whether you end up thousands or even tens of thousands of pounds better or worse off.

Hope things aren't too bad when the time comes, an awful lot can happen between now and then.
 
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dl8860 said:
So **** how it's just luck of the draw with things like this. All very well some people saying you take risk or not when you choose to fix and how, but in reality, 95% of the time it's just pure dumb luck whether you end up thousands or even tens of thousands of pounds better or worse off.

Hope things aren't too bad when the time comes, an awful lot can happen between now and then.
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I think you have to be prepared to pay an ERC.
If you can you can make a decision and give more options.
But yes. The lottery of bad timing can be life changing.


Also avoiding mortgages that are 5pc erc across the whole term. That's one thing I've learnt through all this! Pay attention to ERC terms.
 
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To those of you overpaying - is it reducing your term or just the monthly payments?

I ask because mine is with TSB, and if I'm reading the T&C's correctly, any overpayment defaults to just reducing the capital, but not the term.
So it just means I end up paying less a month instead over the same term. Isn't it more beneficial to bring the term down instead?
 
ljt said:
To those of you overpaying - is it reducing your term or just the monthly payments?

I ask because mine is with TSB, and if I'm reading the T&C's correctly, any overpayment defaults to just reducing the capital, but not the term.
So it just means I end up paying less a month instead over the same term. Isn't it more beneficial to bring the term down instead?
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Its just the capital with me. Checked last week if it reduced the term but no it doesn't. Natwest FYI.
 
ljt said:
To those of you overpaying - is it reducing your term or just the monthly payments?

I ask because mine is with TSB, and if I'm reading the T&C's correctly, any overpayment defaults to just reducing the capital, but not the term.
So it just means I end up paying less a month instead over the same term. Isn't it more beneficial to bring the term down instead?
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Ive been overpaying an additional ~70% on top of my mortgage payments every month the last 6 years, even with rates through the floor. My thinking has always been: pay down the mortgage as quickly as possible so that when rates do go up i'm remortgaging £200K not £300K (numbers for illustration only).
 
ljt said:
To those of you overpaying - is it reducing your term or just the monthly payments?

I ask because mine is with TSB, and if I'm reading the T&C's correctly, any overpayment defaults to just reducing the capital, but not the term.
So it just means I end up paying less a month instead over the same term. Isn't it more beneficial to bring the term down instead?
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Eventually it will because you can reduce the capital to next to nothing and just end the mortgage. I don't see how they could tie you into the term, if you sold up it would be a new mortgage anyway.
 
ljt said:
To those of you overpaying - is it reducing your term or just the monthly payments?

I ask because mine is with TSB, and if I'm reading the T&C's correctly, any overpayment defaults to just reducing the capital, but not the term.
So it just means I end up paying less a month instead over the same term. Isn't it more beneficial to bring the term down instead?
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It reduces the size of the lone. However when your mortgage deal is up you are free to adjust its length.

I went from 25 year 5 year fixed
To 15 year 5 year fixed
To 8 year 5 year fixed
Back up to 25 year 5 year fixed due to purchase a new house.

We paid a small early repayment charge as it let us consolidate the debt into one very very low rate.

My advice to to overpay as much as you cain (within the rules of your deal) as next time you re mortgage you will be in a way better deal.

Even a small amount can make a big difference.
 
Hagar said:
Eventually it will because you can reduce the capital to next to nothing and just end the mortgage. I don't see how they could tie you into the term, if you sold up it would be a new mortgage anyway.
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I don't think it ties me in as such, it's just that with my current mortgage has a total term of roughly 16 years left. I'm 2 years into a 5 year fix. I'm allowed to overpay up to 10% of the capital every year without paying ERC's.

However if I overpay a lump sum now, it will come off the capital, and my mortgage payments from the next month onwards will reduce based on new capital amount for the same deal/term. It won't take the time off the total term and keep my payments the same as they currently were (hopefully I'm making sense)

crazyDAJT said:
It reduces the size of the lone. However when your mortgage deal is up you are free to adjust its length.

I went from 25 year 5 year fixed
To 15 year 5 year fixed
To 8 year 5 year fixed
Back up to 25 year 5 year fixed due to purchase a new house.

We paid a small early repayment charge as it let us consolidate the debt into one very very low rate.

My advice to to overpay as much as you cain (within the rules of your deal) as next time you re mortgage you will be in a way better deal.

Even a small amount can make a big difference.
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That's what I think I'll have to do, just reduce the overall term at the end of my fixed deal instead.
 
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Your probably right. My last mortgage was over a 15 year term as I was 50 and did not want to retire with it. We walked it down to 19k from 70k in 8 years and then paid it off with an inheritance. However we only ever had repayment mortgages with variable rates as fixed rate mortgages initially were not available and then not very good value. Therefore my own experience was different. Paying the mortgage off was always the number one priority.
 
ljt said:
I don't think it ties me in as such, it's just that with my current mortgage has a total term of roughly 16 years left. I'm 2 years into a 5 year fix. I'm allowed to overpay up to 10% of the capital every year without paying ERC's.

However if I overpay a lump sum now, it will come off the capital, and my mortgage payments from the next month onwards will reduce based on new capital amount for the same deal/term. It won't take the time off the total term and keep my payments the same as they currently were (hopefully I'm making sense)
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It not a big deal of it doesn't reduce the term now. Just reduce it yourself when your current fix is up. Main thing paying your mortgage down.
 
ljt said:
So it just means I end up paying less a month instead over the same term. Isn't it more beneficial to bring the term down instead?
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What difference does that make? Unless you are not going to touch your mortgage again when your current term is up, the money you owe is the money you owe and the interest is calculated on the outstanding balance. The term of the mortgage is largely irrelevant if you are going to remortgage at the end of the fix.

Thats why people need to look at mortgages in the context of the fix rather than the actual length of the mortgage. The length of the term usually only relates to potential overpayments as some mortgages only allow you to overpay by X amount before charging you. It also sets the base repayment so if you want a lot of flexibility you might want to set the term long so your base payment is low.
 
I currently overpay each month and it doesn't reduce my term, it just pays off more of it more quickly reducing how much I pay in the end - aka the whole point.
When my fix ends, I will then adjust my term length accordingly. Am I doing it wrong?

EDIT: Each month my payments were say £1000 and then I made them £1300. This will continue for my entire fix. So my payments basically stay the same, they don't go down. This is defined by Martin as reducing my term but it doesn't though because at the end of the 5 year fix I will remortgage. Agh.. I've confused myself.

Martin Lewis on moneysavingexpert says the below, which confuses me:


How do I overpay my mortgage?​

If you've done all the sums and you think overpaying your mortgage is the right decision, then the simplest way, at least the first time you do it, is to give your lender a call. This way, you can check it's allowed, and also ensure your overpayment(s) are used the right way.
When you make an overpayment, your lender may offer you two options: either to reduce next month's payment by the amount you've overpaid, or to keep payments the same and reduce your mortgage term instead.
This is something to watch for – if you get it wrong, it means your overpayment won't actually help you out that much. If you get this choice always, always tell your lender you want to reduce the term of your mortgage.
If your overpayment goes to reduce next month's payment, it just means that you're paying slightly early, so you save some interest, but not much. You'd still repay almost as much as you would sticking to contractual payments, and – crucially – you won't have reduced the term of your mortgage.
Be very clear that you want all future overpayments to reduce the term of your mortgage. Once you've agreed this, you can usually make overpayments through online banking by setting your mortgage account up as a new payee, then making payments as and when you wish.
If you want to overpay the same amount every month, you can set up a standing order to your mortgage account.
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fez said:
What difference does that make? Unless you are not going to touch your mortgage again when your current term is up, the money you owe is the money you owe and the interest is calculated on the outstanding balance. The term of the mortgage is largely irrelevant if you are going to remortgage at the end of the fix.

Thats why people need to look at mortgages in the context of the fix rather than the actual length of the mortgage. The length of the term usually only relates to potential overpayments as some mortgages only allow you to overpay by X amount before charging you. It also sets the base repayment so if you want a lot of flexibility you might want to set the term long so your base payment is low.
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Yes Fez. This was my understanding. Very long mortgage is what we did because it offers more flexibility and is largely irrelevant if you are going to remortgage several times over, as you will adjust it according to how much you managed to overpay, your current LTV and hence deal, house prices and interest rates.
 
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