Can't you sit on the offer, like lock it in, but not fully move to it until closer to the end of your fix?Been offered just over 4% after end of my fix in March. Currently on 2%.
No idea whether to wait or not.
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
Possibly. Not a bad shout, cheers.
Been offered just over 4% after end of my fix in March. Currently on 2%.
No idea whether to wait or not.
You can book the money now. I would probably do so if you want to keep it in check its likely to only be around this anyway even if we do get some drops from the peaks talked about 5-6% etc
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Been offered just over 4% after end of my fix in March. Currently on 2%.
No idea whether to wait or not.
Do the maths. Make a spreadsheet with months running down the left, then make projections for multiple scenarios going month by month. You can then compare total cost over fixed periods/scenarios. I did this with a 2 year fix and it seemed crazy, and assumed 5 would be even more so. but no actually it's better IMO. I actually made the mistake of using the Halifax "moving" rate as compared to the one actually available to existing customer switches so my maths is all off, but having done the leg work to create a tool I can just plumb in the numbers and it'll now lay down all the vagueness for me and take the brainpower out of it a little bit.
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Soldato
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I have 3.5 years left of my current fixed mortgage and think I'm just going to start by overpaying £250 every month.
I paid off a personal loan not long ago and have a tiny balance on my credit card, so can start off over paying on that and then look to increase.
Heck, even if I just stuck to £250, that's £10.5k less capital I'll need to re-mortgage in 3.5 years time.
I paid off a personal loan not long ago and have a tiny balance on my credit card, so can start off over paying on that and then look to increase.
Heck, even if I just stuck to £250, that's £10.5k less capital I'll need to re-mortgage in 3.5 years time.
Reccomend this too.
What I found particularly shocking/useful was to compare my erc to various rates over 5 years (I 2as only considering 5 years)
I had my erc (2k)
Id compare this to
-2pc
-3pc
-4pc
And how much more per month and per full term each rate was.
I was surprised at how small a rate change it took to tip it to paying my erc now and remortgaging.
Then the only guess work is what will rates be over my 5 year term.
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Or (not advice, just a thought) dump that into savings if you can get a higher rate, then pay it off before renewal. Nice to have options, once its paid off your mortgage you can never get it back.
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@squerble
@Chris344
@~Divine~Wind~
Sorry for the tag - phone is a nightmare!
I think it is a sensible offer by them. We’d be ok with the original term - without having to struggle too much - but it made sense for us.. I think!
As we were borrowing more - we did have to send up to date payslips but that was pretty much it.
As for interest only - that genuinely was an option given to us - had we been in dire straits I’d have deffo considered it - but there’s something about interest only (in our situation) that’s never really sit well with me. Probably as it’s only in the last 5 years - that I’ve become financially sensible!!
@Chris344
@~Divine~Wind~
Sorry for the tag - phone is a nightmare!
I think it is a sensible offer by them. We’d be ok with the original term - without having to struggle too much - but it made sense for us.. I think!
As we were borrowing more - we did have to send up to date payslips but that was pretty much it.
As for interest only - that genuinely was an option given to us - had we been in dire straits I’d have deffo considered it - but there’s something about interest only (in our situation) that’s never really sit well with me. Probably as it’s only in the last 5 years - that I’ve become financially sensible!!
Not true. With Nationwide if you make an overpayment you can take a payment holiday upto the same amount. Effectively giving you your cashback over time.
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Soldato
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At their discretion. At least with mine its at their discretion.
Remember interest is taxable so its £1k, £500 or £0 allowance before it becomes taxable depending on someones tax status. (Per annum)
Soldato
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Some older mortgages you could literally draw it back down in cash.
Its very much lender dependant.
I bet most people dont check the options when they take one out, just take the cheapest.
I guess you just have to make your prediction as to what rates might be like in X months or years time and base decisions on that. You can't be laughed at for getting it wrong as nobody knows. I believe rates will rise more. I can't see them going over 10%. I think once they settle in around 5-6%, they may stay that way for some time. I think the days of 0-1% are probably never coming again for most people with a mortgage already.
Soldato
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I generally consider money overpaid as gone rather than there for a rainy-day, but it's the easiest option.
My bank (HSBC) does not offer a good savings rate, so I'd need to take out an account with another one (more paperwork!) to get access to better savings rates. Then my net gain is the few % delta on the difference between the mortgage rate and the savings rate.
Ultimately I think for less hassle, I'll just overpay when I can, gets the mortgage balance down, and I don't have to mess about
My bank (HSBC) does not offer a good savings rate, so I'd need to take out an account with another one (more paperwork!) to get access to better savings rates. Then my net gain is the few % delta on the difference between the mortgage rate and the savings rate.
Ultimately I think for less hassle, I'll just overpay when I can, gets the mortgage balance down, and I don't have to mess about
I generally consider money overpaid as gone rather than there for a rainy-day, but it's the easiest option.
My bank (HSBC) does not offer a good savings rate, so I'd need to take out an account with another one (more paperwork!) to get access to better savings rates. Then my net gain is the few % delta on the difference between the mortgage rate and the savings rate.
Ultimately I think for less hassle, I'll just overpay when I can, gets the mortgage balance down, and I don't have to mess about
Not really much hassle to open a savings account elsewhere and plonk some money in there is it though? There are calculators as to when it becomes worth it. For me, already savings account deals are propping up where it's definitely worth it mathematically apparently.
That's why I was a little confused myself. I'd read on MSE that it's better to overpay and reduce term rather than it reduce payments as you end up paying less overall if it reduces the term, at least that what it said on the MSE site.
A lot of mortgage firms allow you to take your overpayments back out, should you really need them back. (Iirc)I generally consider money overpaid as gone rather than there for a rainy-day, but it's the easiest option.
My bank (HSBC) does not offer a good savings rate, so I'd need to take out an account with another one (more paperwork!) to get access to better savings rates. Then my net gain is the few % delta on the difference between the mortgage rate and the savings rate.
Ultimately I think for less hassle, I'll just overpay when I can, gets the mortgage balance down, and I don't have to mess about
What he means is some mortgage providers see any extra cash you send them as simply a head start on your forthcoming payment. E.g. if you pay a grand a month and send 200 quid they'll assume you intended your future bill to be 800 quid...for whatever reason.
By being explicit that it's an overpayment you are basically chipping away at your total balance remaining. If you do that enough you'll either:
- find that when you go for your next fix, you need less years (i.e. after 5 years on a 25 gear mortgage you may only need another mortgage product over 18 years).
- find your next mortgage is less per month
- have a better loan to value so your mortgage rate is better.