Mortgage Rate Rises

Reading yesterday and again today that the rate are going up a bit so I thought I would look at my current lender just as a comparison if I was to renew my mortgage now compared to when I did renew in late 2022 (due to renew in 2027)

So, when I renewed in 2022, my mortgage increased by £130. If I renewed again now, it would increase by another £85 :o

I realise that, by the time 2027 comes around and hopefully get some pay increases, the increase may be "inflated away" however I really do hope rates drop to the mid 3% range by 2027 and it means my payments will remain circa the same as they are now
 
for those who has paid for their houses in total... and living the mortage free life, could you do some maths for me?

Work out the total that you have paid for your house...
then work of the cost of the house at the time you purchased it, then adjust it for inflation using:
www.bankofengland.co.uk

Inflation calculator

Use our inflation calculator to check how prices in the UK have changed over time, from 1209 to now.
www.bankofengland.co.uk www.bankofengland.co.uk

so if you paid 120k for your house in 2002 (20 years ago)... that 120k would be be equivalent of paying £214,252.54 for the house in today's money.

it's just be interesting to see if the intreast that is changed by mortage lenders is eaten away by inflation..
 
It's not easy to see a lot of positives in buying your first house at the peak of interest, but at least I know I can (just about) afford it.

If you are used to 1.x and still have high mortgage, it's going to hurt.

What I need is a time machine...
 
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Pants said:
If I could get a 3.5% mortgage, my monthly payments would be £430 per month less. Crazy.

1% I would be about £830 per month better off!!
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Yes but I'd imagine your household income is multiple percentages more than mine to afford that size of house/mortgage so its all relative :)


EDIT - Mortgage is 30% of Nett Monthly here (probably easier way to compare)
 
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tamzzy said:
wow that's a hefty %
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Its within the "Rule of Thumb" (bear in mind I am talking NETT Pay, not Gross):

A good rule of thumb is that no more than 35 per cent of post-tax income should go on mortgage payments. However, on average, homeowners with mortgages paid approximately 17.8% of their income on mortgage in 2023, according to research by Statista.
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SOURCE
 
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robj20 said:
Think I'm going to have to overpay for the next 12 months to try and get those monthly payments down by next August.
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Yeah I plan to do the same from the start of next year. All being well, the money that's being put into monthly savings will reach a level to cover about 8 months of outgoings in case of job loss and then I can overpay the mortgage by an additional 30%/month
 
Richie said:
Its within the "Rule of Thumb" (bear in mind I am talking NETT Pay, not Gross):


SOURCE
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That seems very low. I guess "average" encompasses a lot of people who have mortgages they have had for decades and nearly paid off. I would wager the average person who isn't coming towards paying off their home is paying a much larger chunk than that. Even the people who are still on 1.x% rates.
 
Richie said:
Yes but I'd imagine your household income is multiple percentages more than mine to afford that size of house/mortgage so its all relative :)


EDIT - Mortgage is 30% of Nett Monthly here (probably easier way to compare)
Click to expand...
I've been about that high before. Didn't feel comfortable, but needs must. Currently at about 13%. If we are going to move, we're getting close to the time. Would like to but focussing on becoming mortgage free instead is a very tempting option.
 
fez said:
That seems very low. I guess "average" encompasses a lot of people who have mortgages they have had for decades and nearly paid off. I would wager the average person who isn't coming towards paying off their home is paying a much larger chunk than that. Even the people who are still on 1.x% rates.
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It's usual to be a much larger proportion when you first buy and reduce significantly over time as your wages increase. Rate rises are setting that back for many, of course.
 
slinxy said:
for those who has paid for their houses in total... and living the mortage free life, could you do some maths for me?

Work out the total that you have paid for your house...
then work of the cost of the house at the time you purchased it, then adjust it for inflation using:
www.bankofengland.co.uk

Inflation calculator

Use our inflation calculator to check how prices in the UK have changed over time, from 1209 to now.
www.bankofengland.co.uk www.bankofengland.co.uk

so if you paid 120k for your house in 2002 (20 years ago)... that 120k would be be equivalent of paying £214,252.54 for the house in today's money.

it's just be interesting to see if the intreast that is changed by mortage lenders is eaten away by inflation..
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I don't understand what you are getting at?
 
Jono8 said:
I don't understand what you are getting at?
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200sols said:
They dont keep all the interest.
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Its just an exercise in curiosity.

Essentially he wants to see if the interest paid over the mortgage has been eroded away by the increase in house price e.g.

  • Paid £100,000 for house in 1995
  • Use the calculator in his link to estimate what £100,000 is now equal to in today's money - £198,000 (rounded from that calculator)
  • House is now "worth" £300,000 today (price if you were to sell it today)
  • £300,000 less £198,000 (value of house currently less value of house in 1995 adjusted for inflation) = £102,000 "gained value"
  • Total Paid in Deposit+Mortgage Payments = £250,000 (so £100,000 for house (point 1) and therefore £150,000 paid in interest)
  • £150,000 interest paid less £102,000 "gained value" = £48,000 in interest paid (comparatively)

At least I think that's what he is trying to see.
 
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Richie said:
Its within the "Rule of Thumb" (bear in mind I am talking NETT Pay, not Gross):
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no lies, i'd be sweating if my mortgage payments reach that high a % of my net monthly, even if it's rule-of-thumb or not lol
mine's currently stting at 18% (FTB 2 years ago, single/no kids, single income)
 
tamzzy said:
no lies, i'd be sweating if my mortgage payments reach that high a % of my net monthly, even if it's rule-of-thumb or not lol
mine's currently stting at 18% (FTB 2 years ago, single/no kids, single income)
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Needs must at times... My other outgoings are not huge - No loans or credit card balances, car is owned outright. If I remove what is put into savings pots (discretionary), then total bills including food come to 70% of Nett giving 30% of disposable income per month.
 
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