Mortgage Rate Rises

Scam said:
How are you doing these calculations please? We're fortunately only just finished the first year or our 5 year fix at 1.24% (thank God!) and I've always said it's best to overpay. But obviously as rates change it's probably worth us doing this, or at least doing half and half (half overpay as we go, half save on a better interest rate). I haven't had the time to investigate yet.

One thing to be mindful of is your maximum yearly overpayment, I think ours is 10% so we can't save a vast bundle of money for the remaining four years and simply lump it in as a single overpayment.
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Once your deal ends you go onto the SVR, and on that you can (usually) overpay whatever you want.

So you can very short term SVR, pay a bunch off, then fix again. You do take a hit for a little bit doing that as SVR will be even worse than a good fix.

Theoretically interest rates are better but I prefer to overpay mortgage because it's just less debt and less hassle, the difference shouldn't be insane counting in £'s unless you're overpaying hundreds of thousands of £'s.
 
HungryHippos said:
Once your deal ends you go onto the SVR, and on that you can (usually) overpay whatever you want.

So you can very short term SVR, pay a bunch off, then fix again. You do take a hit for a little bit doing that as SVR will be even worse than a good fix.

Theoretically interest rates are better but I prefer to overpay mortgage because it's just less debt and less hassle, the difference shouldn't be insane counting in £'s unless you're overpaying hundreds of thousands of £'s.
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Couldn't you just renew your fix for (amount you still owe - amount you've saved), and pay off the extra at completion?
 
@HungryHippos fair enough. I assumed most would want to avoid the SVR though. I'm not sure if we would save 10% of our debt in 4 years anyway so it might not be an issue. But it's Monday morning so I'm not going to attempt maths like that...

I agree with this though, sometimes 'easy' is best in this day and age...
HungryHippos said:
the difference shouldn't be insane counting in £'s unless you're overpaying hundreds of thousands of £'s.
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I paid off a small bit without going on svr.

I my old mortgage ended at 209k

I remortgaged for 207k.

I sent 2k to the conveyancing team.
 
Haggisman said:
Couldn't you just renew your fix for (amount you still owe - amount you've saved), and pay off the extra at completion?
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Fixes usually have limited ability to re-pay whilst within the fixed term, it's something like 10% of the original balance of the fix per year, at least with Nationwide that is the case.

So if you hope from fix to fix, I think you are still stuck with that limitation.

By going to SVR short term you can get out of the limitation, overpay a lump sum, then re-fix, but it's a hassle.

Someone feel free to correct me if wrong, but I don't think you get a window to just overpay at the end of a fixed term without penalty.
 
413x said:
I paid off a small bit without going on svr.

I my old mortgage ended at 209k

I remortgaged for 207k.

I sent 2k to the conveyancing team.
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That small bit would be within the allowed parameters.

Your mortgage deal will have ERC charges for early repayments above your agreed allowance per year, will differ by product.

My old Nationwide tracker had no ERC at all which was nice.
 
Because my parents made such an obscene amount on property price inflation on the family home, when they downsized and moved away on retirement, they had plenty left over to give me an interest free mortgage for my home.

Maybe I should be smug (that seems to be the British way these days), but I'm just angry at what these cretins are inflicting on the rest of the country.
 
HungryHippos said:
That small bit would be within the allowed parameters.

Your mortgage deal will have ERC charges for early repayments above your agreed allowance per year, will differ by product.

My old Nationwide tracker had no ERC at all which was nice.
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Yes 10% on nationwide with no fees. 3rd year I've been paying down now.

It's on the original mortgage amount too not just the renewal amount. Was for me anyway. Possibly because I stayed with NW.
 
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The other factor is your band, overpaying mortgage makes more of a difference until you hit 40% equity (60% LTV).

Jumping up bands can have a better impact on your affordability than trying to save it and overpay later, and will make a new renewal easier to calculate.
 
HungryHippos said:
That small bit would be within the allowed parameters.

Your mortgage deal will have ERC charges for early repayments above your agreed allowance per year, will differ by product.

My old Nationwide tracker had no ERC at all which was nice.
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You can't pay off whatever you like when changing lender?
 
I was a FTB in August and my mortgage is fixed now at 3.19%.

It felt rough at the point when everyone was talking about their rates in the 1-2% bracket.

Now it feels like I got in just in time.......
 
JamesH85 said:
I was a FTB in August and my mortgage is fixed now at 3.19%.

It felt rough at the point when everyone was talking about their rates in the 1-2% bracket.

Now it feels like I got in just in time.......
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Hopefully 5 years or more mortgage?
 
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kevman said:
In a similar situation on 2 yr fix at 1.18 ending in june. If i switched now it would take a couple of years to recoup the costs of additional payments plus ERC. Current thinking was to just sit on a tracker next year and hope rates drop, which was being forecast not long ago! Earliest opportunity to change without fees is in jan so see what the state of play is then.
The press do like to scare monger with all these rate hikes. The rate predictions generally come from investors who probably have a vested interest in it going really high
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To be honest that was my thinking as well, however with the pound plummeting I can only see interest rates shooting up even faster than I originally thought.
 
HungryHippos said:
Oh yes, maybe, though it would force you to switch to a new lender.

Staying on the same one has some benefits, don't have to pass affordability checks etc like you would on a new lender.
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Yeah, that's more what I meant, a few extra hoops to jump through perhaps, I guess whether it's worth it or not depends how much it saves
 
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Christ, 5 Yr fixed at <60% LTV with my current lender is now about 4% (vs my 1.98% & 2.39% current rates)
We were looking at moving but I can't see how that would be a good idea.
 
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