Mortgage Rate Rises

HangTime said:
I agree. Double-digit inflation rates and people are talking about falling interest rates like it's a done deal looming on the horizon. Now to be fair I do expect inflation to fall simply because of the annualised nature of it, we had very big rises in 2022 so even 'highish' price rises in 2023 will see the rate fall, but equally the annualised nature of it means it will be slow to fall as the 2022 rises take a year to drop out of contention, so a fair way to go to get back to the 2% target.
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I'll be fuming if prices dont come down as inflation comes down :mad: ;)
 
BOE base rates are going to top 6 to 6.5%. Basically aligned with the US who are also going there. The indices are very indicative of this, and the markets are starting to realise that the Fed pivot ain't coming.
 
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I have 2 mortgages against the one property (ported from our flat to our house)
Mortgage 1 - Circa 172k, 5 year fix ending in August 2023 (2.44%)
Mortgage 2 - Circa 66k, 5 Year Fix ended in January 2025 (2.24%)

We bought at 90% LTV combined, and are now at 64% LTV due to property value increasing over the last 5 years.

We are expecting to do a large extension in around 2 / 3 years time and suspect we may need to "pull" some money from the house to fund part of it via equity release during remortgage at this point. Would I be right in saying that we would be able to do this pull when the smaller portion of the mortgage is due for renewal rather than having to shorten the length of the fix on the larger part? I am keen to lock in that for 5 years at 4.0% if still available at the end of the month but if we will need to repay as part of any equity release remortgage on the smaller portion then that becomes less attractive.

Not sure if I am explaining correctly, any thoughts?
 
blairw said:
I have 2 mortgages against the one property (ported from our flat to our house)
Mortgage 1 - Circa 172k, 5 year fix ending in August 2023 (2.44%)
Mortgage 2 - Circa 66k, 5 Year Fix ended in January 2025 (2.24%)

We bought at 90% LTV combined, and are now at 64% LTV due to property value increasing over the last 5 years.

We are expecting to do a large extension in around 2 / 3 years time and suspect we may need to "pull" some money from the house to fund part of it via equity release during remortgage at this point. Would I be right in saying that we would be able to do this pull when the smaller portion of the mortgage is due for renewal rather than having to shorten the length of the fix on the larger part? I am keen to lock in that for 5 years at 4.0% if still available at the end of the month but if we will need to repay as part of any equity release remortgage on the smaller portion then that becomes less attractive.

Not sure if I am explaining correctly, any thoughts?
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Is this with the same lender, assume it is.
Its quite a specific question and could well vary from lender to lender.
Plus ofc these things can change over time, especially with economic environment.

If you fixed the August one from this year for 2 years then you may be able to combine into one and also free up the equity at that point in 2/3 years.

Your lender may even allow another mortgage for the equity release that you want.
Really they are only extra products since your lender will already be noted on your deeds in effect.

Just noticed your in Scotland, I would assume they work the same way but not necessarily.
You do have some slightly differing rules to England.
 
Now in a position to secure a rate for both my products (one finishes end of March, other end of August). I have 13 years 6 months left on both products. I had hoped to extend the term a little bit and keep payments the same but doing that takes me to 17 years and four months. Nightmare.
Think I’ll just suck up the increases and pay the extra £188.88 to keep the term length.

This is at a new rate of 4.79% for both parts over 2 years. Best rate according to MSE is 4.62% with Yorkshire but I’d have to pay an ERC of £580 to get that which doesn’t seem worth the bother or cost.

Final option is to extend term to keep payment and overpay. Gives a bit of flexibility if things get tight but will I be disciplined to keep that overpayment. And psychologically going for a longer term than I had originally hurts, albeit I appreciate this is a bit daft.

Decisions decisions!
 
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Depends how disciplined you are I suppose. Flexibility is a good thing but people often get too comfortable with that bit extra spare a month then never end up doing that overpayment and costing themselves more money in the long run.
 
What's the actual benefit to extending the term but overpaying? I can see the benefit of being able to drop back to your current monthly payment if it was required, but is that the only one?
 
Zefan said:
What's the actual benefit to extending the term but overpaying? I can see the benefit of being able to drop back to your current monthly payment if it was required, but is that the only one?
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Lower mandatory costs mean if you have higher than usual expenses, your extra payment is optional.

It's just extra flexibility, if you set it lower but overpay the extra it should be similar.

I like the flexibility so I prefer a longer duration, even though I overpay pretty religiously, some months I may not if I've had other stuff to buy.
 
Zefan said:
What's the actual benefit to extending the term but overpaying? I can see the benefit of being able to drop back to your current monthly payment if it was required, but is that the only one?
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Yea just some flexibility. By itself the increase is affordable but with everything else going up it may be prudent to bake some flexibility in so if necessary I could reduce my payment for a couple months if required. However, the issue is If I don’t then increase it and cost me years of interest.
 
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Yeah as others have said, increasing term time but overpaying same amount as before will result in the mortgage getting paid off at the same time but your not contractual obliged to pay that higher rate each month.
We have been over paying as it is and reducing the term time by 5 years for next deal is about the say as we are over paying so going to go for it.
Might even overpay a bit more again.
 
I'm a bit of a half way person.
I know (for better or worse) I won't overpay. But I will save it. Whether those savings are worth it. (S&S ISA) we will see vs the safe mortgage repay.

I have however shortened the term so to force what would have been an overpay.

But to shorten the term too much could be dire if you were out of work for too long.
 
The terms of overpayment are also important.
Different lenders apply different rules, eg Nationwide have 3 options in effect
1) overpayments reduce future payments. keep term the same
2) overpayments reduce capital only and keep repayments the same. term reduced to match outstanding capital
3) overpayments reduce capital only and keep repayments the same. term left the same.

The default is I believe 1, and if you select reduce capital the default is 2.
3 is an option. Basically your not changing your commitment with this one.
So you could overpay on option 3, keep term the same, then change your mind and look to move to 1 and reduce your payments and keep term the same.
If you overpay on option 2 you by default have in effect locked in an earlier mortgage end date and as such your option to lower payments in future is wiped out.

As ever lenders can have quite different terms and conditions on things like overpayments so you really need to understand what happens in those scenarios.
 
Checked my mortgage rate last month, just logged in and it's gone from 4.25% to 4.75% - frick, wasn't aware of yet another rise.

In a few months my rate has now gone from 0.84% to 4.75%.

I don't know whether to get a bank loan to clear the remaining balance or not.
 
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