Mortgage Rate Rises

Kamakazie! said:
They are all the same!
Click to expand...

They are not.
Some lenders even have differing terms to different products, especially if you look over time.

Eg there used to me many products where you could be repaid in cash any overpayments. I don't know of anyone with those terms now since lenders found out what often happened was people in financial difficultly would draw it down as a sticking plaster and make out it was for different reasons.
 
Mercenary Keyboard Warrior said:
They are not.
Some lenders even have differing terms to different products, especially if you look over time.

Eg there used to me many products where you could be repaid in cash any overpayments. I don't know of anyone with those terms now since lenders found out what often happened was people in financial difficultly would draw it down as a sticking plaster and make out it was for different reasons.
Click to expand...
I was joking since I mixed up someone mentioning Nationwide and the person I was replying to who mentioned HSBC.
 
jaybee said:
Not sure I follow.

With HSBC I was paying amount X per month. I rang 15 months ago and told them I'll pay amount Y per month. Nothing happened to the term length or with the monthly payments reducing each month during the 5 term fix. It all goes into reducing the amount I'll pay in interest sooner.
Sorry If I'm being stupid here.
Click to expand...
You need to.phome HSBC, but I've never seen a major bank mortgage where you can't use historic overpayments to reduce future payments.

In the end, overpaying means you are paying down more capital from your loan. This has to result in 1 of 2 things, either you pay less in the future (over the same remaining term), or you pay the same in the future (over a shorter term).
If you paid more for the same term you'd have paid back more than you owed in capital & interest and the lender would then owe you money.

It is a bit more complicated where you remortgage before the full loan is repaid, as then the overpayments have just reduced the total redemption value, but in effect it's the same outcome of lower payments or shorter term on the new mortgage.
 
Kamakazie! said:
You need to.phome HSBC, but I've never seen a major bank mortgage where you can't use historic overpayments to reduce future payments.

In the end, overpaying means you are paying down more capital from your loan. This has to result in 1 of 2 things, either you pay less in the future (over the same remaining term), or you pay the same in the future (over a shorter term).
If you paid more for the same term you'd have paid back more than you owed in capital & interest and the lender would then owe you money.

It is a bit more complicated where you remortgage before the full loan is repaid, as then the overpayments have just reduced the total redemption value, but in effect it's the same outcome of lower payments or shorter term on the new mortgage.
Click to expand...

+1, that's the point of overpayments after all! My aim is to reduce my repayment period. On my recent renewal I now only have 17 years left of my 25year mortgage though I've only been paying in for 7 years. So my overpayments have reduced my term by 1 year so far.

I notice Jaybee said he/she thinks this "keep payments the same and do not reduce the term". I believe that means whilst overpaying the money you overpay remains accessible in case you need it, until your current deal comes to an end? I select this myself with Nationwide. At renewal time the overpayment is applied and in my case the term is reduced, as that is what I choose. Currently won't finish paying until I'm 62, not ideal. I'm aiming to reduce that by at least another 5 years but who knows what the future will hold....
 
Gixer said:
+1, that's the point of overpayments after all! My aim is to reduce my repayment period. On my recent renewal I now only have 17 years left of my 25year mortgage though I've only been paying in for 7 years. So my overpayments have reduced my term by 1 year so far.

I notice Jaybee said he/she thinks this "keep payments the same and do not reduce the term". I believe that means whilst overpaying the money you overpay remains accessible in case you need it, until your current deal comes to an end? I select this myself with Nationwide. At renewal time the overpayment is applied and in my case the term is reduced, as that is what I choose. Currently won't finish paying until I'm 62, not ideal. I'm aiming to reduce that by at least another 5 years but who knows what the future will hold....
Click to expand...

I'm also overpaying to reduce the term. I do have the flexibility to stay the same term and reduce payments at some point, but that seems a bad option.

I think I am on schedule to finish five years early if I continue to overpay at the rate I set myself.

My wife is of the "we may be run over by a bus tomorrow" school, and would rather have more ready cash now.

Both views are equally valid, but I really want to own outright- as soon as possible.
 
potatolord said:
I'm also overpaying to reduce the term. I do have the flexibility to stay the same term and reduce payments at some point, but that seems a bad option.

I think I am on schedule to finish five years early if I continue to overpay at the rate I set myself.

My wife is of the "we may be run over by a bus tomorrow" school, and would rather have more ready cash now.

Both views are equally valid, but I really want to own outright- as soon as possible.
Click to expand...

Very much so.
My gfs had some bad family news recently and they had a few regrets of not doing what was planned now.

Its always a juggling act of living and planning. Myself? I'm moving towards living now. Saved up enough in my mind that now I can start spending (living) a bit more.

My natural instinct is to horde money. But no point dying with loads. Especially when (for myself) I don't need to think of inheritance. And will probably get some.
 
The lender i am completing my mortgage with beginning of july, is now being advertised at 5.15% :o for a 5 year fix, thats shocking



im glad i bit the bullet when i did kind of, could have been a lot worse, although its still not great

when i done the search the best this lender was doing on a 5 year fix no prod fees was 4.15%, it then went down to 3.95% which im locked at now,


shortly after they re-advertised this as 4.30%, now its 5.15%

I feel for those who are only just searching for deals now not locked in to anything decent and have to remortgage in the next few months.
 
I don't understand why so many people only did a 2 year fix? Especially those with "smaller" mortgages. The most expensive outgoing for nearly everyone is mortgage/rent. If you know it's fixed and you can afford it for the next 5 years and you don't need to worry about economic uncertainty then why not fix for 5.

Their logic goes along the lines of: "Well it could go down after 2 years, I don't want to pay more" Yes but there's no guarantee it will drop, it could stay around 5%+ for the next 5 years if not longer especially considering how well inflation is being controlled at the moment...

The reason why people lost their homes in the late 80's was due to a huge increase in interest rates, I'm not saying we will reach the same levels but is it unreasonable to say interest rates are more likely to hit 6.5-7.0% than back down to 2-2.5%
 
Last edited:
flibbage0 said:
I don't understand why so many people only did a 2 year fix? Especially those with "smaller" mortgages. The most expensive outgoing for nearly everyone is mortgage/rent. If you know it's fixed and you can afford it for the next 5 years and you don't need to worry about economic uncertainty then why not fix for 5.

Their logic goes along the lines of: "Well it could go down after 2 years, I don't want to pay more" Yes but there's no guarantee it will drop, it could stay around 5%+ for the next 5 years if not longer especially considering how well inflation is being controlled at the moment...
Click to expand...
To be fair a longer deal also means that it tends to costs more to get out of the deal if you need to.
 
MikeTheNative said:
To be fair a longer deal also means that it tends to costs more to get out of the deal if you need to.
Click to expand...

If you can get a product with either an ERC of 1% or 2% for all years then its not so bad


Mine is a 2% ERC, which means if for some reason the rates drop dramatically, say back to something like 1.2 to 2%, it might be worth me biting the bullet, maybe,

i have thought about it, and initially i wouldnt really want to sacrifice £2.2k or what ever for an ERC, but thinking about it, it would be a little out of savings, or worst case, sacrificing one month instead of putting £2.2k in savings, id put 2.2k in to an ERC then remortgage, however, part of me is thinking ill just ride out the 5 years


if you are on a 5% ERC in year 5, 4% ERC in year 4, 3% ERC in year 3 etc etc then nah it wouldnt be worth using that, unless you absolutely had to (IE a SALE)
 
DJMK4 said:
The lender i am completing my mortgage with beginning of july, is now being advertised at 5.15% :o for a 5 year fix, thats shocking



im glad i bit the bullet when i did kind of, could have been a lot worse, although its still not great

when i done the search the best this lender was doing on a 5 year fix no prod fees was 4.15%, it then went down to 3.95% which im locked at now,


shortly after they re-advertised this as 4.30%, now its 5.15%

I feel for those who are only just searching for deals now not locked in to anything decent and have to remortgage in the next few months.
Click to expand...
We have just gone past peak inflation, if inflation keeps dropping , we will need to lower base rates so it does not cause more harm to the economy.

I still think rates will drop last quarter 2023.
I think the boe will reduce base rate July most likely August, Sep.
 
Mrwong said:
We have just gone past peak inflation, if inflation keeps dropping , we will need to lower base rates so it does not cause more harm to the economy.

I still think rates will drop last quarter 2023.
I think the boe will reduce base rate July most likely August, Sep.
Click to expand...


The increments will be very small for the drops, will take al long time probably.

IE now there above 5%, i cant see them getting down to 3.5 for another few years, maybe im wrong though


Ill stick with my 3.95% deal now tbh, With the russia / ukraine thing not backing down there is no clear idea what is going on

I decided against trackers
 
Mrwong said:
We have just gone past peak inflation, if inflation keeps dropping , we will need to lower base rates so it does not cause more harm to the economy.

I still think rates will drop last quarter 2023.
I think the boe will reduce base rate July most likely August, Sep.
Click to expand...
You think they'll reduce it next month? Not a chance.
 
Last edited:
You must log in or register to reply here.
Back
Top Bottom