Mortgage Rate Rises

Hagar said:
Life's lessons,

Always pay the mortgage first and always overpay if you can. (think how much money you may have saved overpaying when rates were cheap).

Never use expensive credit to buy fast depreciating assets, holidays, cars etc.

I cannot think of one thing we bought on credit excepting the house.
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This is where the line of thinking goes in the opposite direction for me because you've gone 100% the other way! :D

I've been given literally hundreds of pounds by credit providers because I've spent on credit cards and paid it off the same month, and I've got a kitchen on 0% interest for 5yrs, which I'll pay off before any interest is accrued.

However, I also share your view in that overpaying a mortgage is valuable to a lot of people, and I think that sometimes the thought process on whether it's a good idea to overpay or not is a bit too "binary".
 
Slam62 said:
So we are back to 1989, I remember it well, changed my life in many very significant ways, changed my confidence in the stability of things immensely.
In the end I have to say things turned out OK, lots of valuable lessons learnt.

No matter who you are you can not take job security for granted.
When you have no job, little in savings and house prices have tanked a mortgage just becomes a nightmare.
You can't live where you want to, you have to go where the work is.
The world will not support you, you are on your own.
Buy at the right time fine, buy at the wrong time you're stuffed.

Overtime house prices do always go up, but there are hiccups along the way.

I am aware of 2 people who recently sold, those sales have fallen through.

One had no chain, was reasonably priced, the 'investor ' offered the asking price.

Personally I am struggling to believe prices will drop, but could be financial crisis 2 with no QE just QT.
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Almost. Everything at the moment is the same except job losses were really high then but of course very high interest rates and inflation just like then. Not to say job losses won’t happen, we have the winter to get through.
 
Karl said:
This is where the line of thinking goes in the opposite direction for me because you've gone 100% the other way! :D

I've been given literally hundreds of pounds by credit providers because I've spent on credit cards and paid it off the same month, and I've got a kitchen on 0% interest for 5yrs, which I'll pay off before any interest is accrued.

However, I also share your view in that overpaying a mortgage is valuable to a lot of people, and I think that sometimes the thought process on whether it's a good idea to overpay or not is a bit too "binary".
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I'd argue that's not really "credit".

We use a reward card and pay it off every month, why wouldn't I get cashback.. the difference between now and the idiot me of 15 years ago is then I knew I wasn't going to pay it all off, now I know for a fact I can't spend enough in a month that I can't pay it off.

Similarly we have a sofa and kitchen on 0% but again the difference is previously that was a way of having something I couldn't afford, now it's a way of keeping my money in savings/bonds/overpaying the mortgage etc and spreading the cost as we have inflation and wage rises which means ultimately the "thing" is costing me less.

Always pay the highest debt first which in my case is only the mortgage.

If the **** hits the fan I know we have more than enough to pay it off immediately.

But no smugness, it's taken me until my 40s to get back to an even keel and I'm no idiot, it's super easy to screw these things up when you're young. In fact it boggles my mind that we don't teach kids about financial management in school.
 
matt100 said:
I'd argue that's not really "credit".
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You're not using it in a way that will destroy your finances, but it is 100% credit. If you used it with the notion you'd pay it back and "I've got plenty of time left yet!" like many do, the APR that kicks is crippling, as you're no doubt aware.

My reply was to @Hagar 's statement of having literally never bought a single thing on credit in his life, which of course is his prerogative, but there are lots of credit products that (if used safely and responsibly like you have) will earn you money.
 
Karl said:
You're not using it in a way that will destroy your finances, but it is 100% credit. If you used it with the notion you'd pay it back and "I've got plenty of time left yet!" like many do, the APR that kicks is crippling, as you're no doubt aware.

My reply was to @Hagar 's statement of having literally never bought a single thing on credit in his life, which of course is his prerogative, but there are lots of credit products that (if used safely and responsibly like you have) will earn you money.
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Totally.

I pay off my Amex balance every month, and since i got the card(s), I have built up about 190k of Amex points. Which can buy quite a long distance flight. It used to be enough for a Business Class Return to Japan (before Pandemic).

There are also often other offers tied to the card, like currently there is (for me) can get £30 back on Avis over £200, 10% off in Game, £50 off British Airways with £500 spend.

If you play the game right, you can make it work for you. If you play it wrong, paying interest, then they win.
 
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ci_newman said:
Just a comment on this, the statutory requirement for redundancy payouts is capped at a weekly rate of £571. If your company folds, you'll only get the bare minimum from the Government so 10 x your weekly pay is £5710.
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Company won't fold (it's a huge multinational), at worst they would just close the UK office. Also my contract terms state the redundancy agreement, based on salary at time of redundancy.

I had a few friends go who worked in a sister brand when the UK got restructured, and they all got a week's pay per year of service, from marketing exec to head of marketing.
 
Karl said:
You're not using it in a way that will destroy your finances, but it is 100% credit. If you used it with the notion you'd pay it back and "I've got plenty of time left yet!" like many do, the APR that kicks is crippling, as you're no doubt aware.

My reply was to @Hagar 's statement of having literally never bought a single thing on credit in his life, which of course is his prerogative, but there are lots of credit products that (if used safely and responsibly like you have) will earn you money.
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I think probably it was because when I was younger and largely impecunious, interest free credit and cashback deals were not invented or not common. Now I don't need to save for stuff as I have money in several accounts just in case.

We just did save and generally paid cash for things, often new but sometimes nearly new.
 
krooton said:
Company won't fold (it's a huge multinational), at worst they would just close the UK office. Also my contract terms state the redundancy agreement, based on salary at time of redundancy.

I had a few friends go who worked in a sister brand when the UK got restructured, and they all got a week's pay per year of service, from marketing exec to head of marketing.
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It's a maximum of £571/week if your employer is insolvent. In that scenario it's immaterial what it says in your contract.
 
Karl said:
I think a lack of self discipline is different from:
1) Forgetting what your plan was 10 years down the line
2) Your life circumstances changing compared to your decision 10 years ago

I've read instances of people whose cheap mortgage deals expired just as that money they'd been squirrelling away in S&S dropped when markets suffered a dip. Now you're in a situation where you're gambling that it'll pick up again ahead of your mortgage interest piling up aren't you?

All the above also presumes you don't lose your job, and can't find another one before whatever emergency fund you have is wiped out.
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Yes but for all those things you've said, overpaying your mortgage does not help, you'll still be in the same position, having savings would help the most in those circumstances.

Overall you should not invest what you cant afford to lose. If you can afford to lose it, you never need to sell it. And its possible you might lose a bit or could have done things better, well thats life, but nothing bad happened due to it.

The example you give is so insanely stupid of a position to get yourself into, however i know everyone will end up doing that.

I know the average investor returns are abysmal, i know people who die outperform those who are alive.

So basically i will rephrase, the best thing for the average person to do, is to overpay their mortgage. But this is not the best thing to do.
 
GaryTheSnail said:
If only people did that today and not relied on too much credit.
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Then as shown, they'd be losing out on many deals.

The old discount for cash thing mostly died out a long time ago (unless it's for a trader avoiding the VAT). Cash is expensive to handle for a business and you can game the credit system to gain benefits, cashbacks, perks and initial discounts.
 
neocon said:
Some dude on radio4 was like I have £340k mortgage and my payments have gone from £200 to £1200 ?? I think I heard that right. But why should we feel sorry for people overstretching so much.
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Numbers doesn't sound right. On sky news yesterday evening they were talking to finance experts about mortgage increases and I think the gist was that with the rate increases you'd be looking at about an extra £100 a month per 250k of borrowing. So on 340k, he should only be looking at an extra £150 a month, not a £1000 :eek:
 
krooton said:
Handy aspect of working for my company for 10 years is that if crap really hit the fan and I got made redundant, that is 10 weeks redundancy pay.

Should be able to find a new job within 2.5 months, LinkedIn is constantly harrassing me with job offers.
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I'm not sure why that's "handy" isn't that pretty much inline with statutory redundancy. A good deal is 2/3/4 weeks pay per year of service.
 
Semple said:
I'm not sure why that's "handy" isn't that pretty much inline with statutory redundancy. A good deal is 2/3/4 weeks pay per year of service.
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Yes effectively 1 weeks pay for every year served . It’s also capped and age dependant .
£571 is the max per week you can get

  • 0.5 week’s pay for each full year worked when you’re under 22
  • 1 week’s pay for each full year worked when you’re between 22 and 41
  • 1.5 week’s pay for each full year worked when you’re 41 or older

But it’s tax free up-to 30K .
 
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