Mortgage Rate Rises

[Mercenary Keyboard Warrior]

didn't know it was even a thing haha

Typically (but its not an exact rule) the terms are better with Building societies than banks.
Banks tend to have the terms that are worse, like Santander are really poor compared to just about everyone, most people don't look at these and pick the lowest payment, hence saving a few quid a month can result in terms lost that are worth thousands potentially.

ERCs, additional repayment limits, limitations in regards overpayments, portability etc.

 

[Scam]

With mortgage payments, I have to phone HSBC to make any changes. So perhaps 10 minutes in queue and then talk to someone. If I want to change my savings amount, I can do it in the app in a couple of minutes. Besides, with savings if an emergency comes up, I can take the money straight out. With mortgage overpayments it's gone into equity.

With our mortgage lender (well known building society) we could change our overpayments online or in the app in about 5mins. Horses for courses.

EDIT: @jaybee I don't suppose you'd care to share that sheet? It has been a while since we did our sums, I'm sure the savings rates are higher now so it'd be interesting to see if the gains outweigh the effort.

 

[Foghorn Leghorn]

With our mortgage lender (well known building society) we could change our overpayments online or in the app in about 5mins. Horses for courses.

Same with our mortgage lender, first direct. Payments are set up as a standing order so easy to adjust, they don't seem to care what I pay back each month and no limits on over payments.

 

[jaybee]

With our mortgage lender (well known building society) we could change our overpayments online or in the app in about 5mins. Horses for courses.

EDIT: @jaybee I don't suppose you'd care to share that sheet? It has been a while since we did our sums, I'm sure the savings rates are higher now so it'd be interesting to see if the gains outweigh the effort.

If I get time I will knock up a more user friendly version and share it, where you can populate your info in fields at the top then get a projected comparison.
Are there any other comparison tools which would be of benefit to anyone? I think there are already calculators and tools out there for this kind of thing anyway really?

 

[dlockers]

Next we'll argue that regular savers at 8% only give 4% in this overpaying example...

 

[413x]

I'd say only admin is making sure savings + mortgage comparison is done roght/on time.

Ie I know my mortgage is now locked for 5 years at 1.9.
If rates go. Up like they have. Jump on a fixed term isa/bond that ends at renewal and utilise it.

Its a bit of admin.. Whether it's worth the time or not.. Depends on individuals.

 

[413x]

Next we'll argue that regular savers at 8% only give 4% in this overpaying example...

Don't! Just don't!

 

[jaybee]

Next we'll argue that regular savers at 8% only give 4% in this overpaying example...

How does that work? Is the answer compatible with GSCE level C maths?

 

[tamzzy]

Next we'll argue that regular savers at 8% only give 4% in this overpaying example...

Don't! Just don't!

How does that work? Is the answer compatible with GSCE level C maths?

i think we already answered this one a month ago lol

 

[tamzzy]

With our mortgage lender (well known building society) we could change our overpayments online or in the app in about 5mins. Horses for courses.

EDIT: @jaybee I don't suppose you'd care to share that sheet? It has been a while since we did our sums, I'm sure the savings rates are higher now so it'd be interesting to see if the gains outweigh the effort.

psst: https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

 

[jaybee]

psst: https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

Ah nice, I didn't ever see that savings comparison part before. Not sure how long that's been around.

 

[tamzzy]

Ah nice, I didn't ever see that savings comparison part before. Not sure how long that's been around.

at least a year

 

[Scam]

psst: https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

As above it’s not massively helpful for comparing your options at certain points. IE we have 3 years left on our fixed rate so we’d either overpay every month until then, or save until it ends and dump it in. I can’t figure out a way of using that tool to tell me where we’ll be at, at that point.

Punching in a mortgage rate, savings rate and 20 year term isn’t particularly helpful for anyone is it, as those rates will change massively as time goes on.

 

[tamzzy]

As above it’s not massively helpful for comparing your options at certain points. IE we have 3 years left on our fixed rate so we’d either overpay every month until then, or save until it ends and dump it in. I can’t figure out a way of using that tool to tell me where we’ll be at, at that point.

Punching in a mortgage rate, savings rate and 20 year term isn’t particularly helpful for anyone is it, as those rates will change massively as time goes on.

use this spreadsheet: https://www.locostfireblade.co.uk/spreadsheet/Index.html

 

[Chris344]

We are looking at our mortgage options and are stuck between a fix and a tracker:
£605k mortgage (in the south

)
£265k equity

Fix: 4.57% 2 years @ £2888 and £1k product fee
Tracker: 5.40% 2 years @ £3208 and £1.5k product fee

With the fix, it is obviously fixed for the period and if BoE base rate drops by a decent amount, then we will be disappointed and stuck on a tracker with an ERC. However, the tracker would take advantage of any base rate reductions. The fix is around 4k more expensive assuming the base rate slowly drops to 3% over the term. The other option is a fix with a lender that allows a new product switch to be fully applied at the 18 month point.

Where do we see the base rate going? The estimates seem to be changing almost daily!

 

[b0rn2sk8]

I don't see the BoE base rate dropping that low unless something dramatic happens and that something dramatic is also probably undesirable. I can't see it dropping below 4% let alone 3%, that would need a 2.25% drop.

 

[BUDFORCE]

Yea I don't see it dropping much at all any time soon.

To be honest things are starting to pick up, it's been a tough 18 months but things are starting to adjust, really back to normal, in the scheme of things.

I actually think reducing the base rate now would do more harm then good.

 

[Chris344]

Thanks both, so actually, the tracker is probably the better option and then take stock in 18 months time. If the base rate drops slowly over the next 24 months then there’s not much difference in potential costs.

 

[Mercenary Keyboard Warrior]

IMO take the fix, pay the amount of the tracker off the fix (ie the £3208 monthly), if you can afford it which it sounds like you can.

 

[tamzzy]

Thanks both, so actually, the tracker is probably the better option and then take stock in 18 months time. If the base rate drops slowly over the next 24 months then there’s not much difference in potential costs.

eh? the tracker needs to drop below 3.6 within 12 months for the tracker to be a worthwhile option

IMO take the fix, pay the amount of the tracker off the fix (ie the £3208 monthly), if you can afford it which it sounds like you can.

this