Interest only is pretty grim.
I assume the vast majority are not in this. Or if they are it's for a deliberate reason
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
Interest only is pretty grim.
I assume the vast majority are not in this. Or if they are it's for a deliberate reason
Soldato
That's because you're a) chomping a grand or so off the mortgage balance each month with such a short term and b) the payable monthly rate assumes the same level of interest and reduction in balance going forwards.
35 years £200K at 1% = £564 per month
35 years £200K at 5% = £1010 per month
Presume this is the calculator you used: https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/
The shorter the term the quicker you pay down the balance and therefore the less interest you pay.
I don't think 30 - 35 year terms are that uncommon, I'm on one now (but I've overpaid some and will carry on doing that when my rate goes up).
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Soldato
Capital repayment makes a significant difference for sure. But in your example the total cost over the term has still increased by nearly £150k. 150k over 20 years, for what gain? Nothing it's money burned essentially.
Election campaigns arguing over minor tax tweaks when nothing touches the financial impact of a trebling of mortgage rates on people.
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Deduct the repayment then you'll see the increase in the interest part is easily 4-5x
Yep, mine has gone from about 2% up to 7.89% on a tracker. I could have got a slightly lower rate, but I'm trying to sell it and the lower rates all have massive early repayment charges. Also, because the postal system has messed me about, I'm paying 9.74% this month as the new rate hasn't kicked in yet.
Annoyingly I still can't seem to get headline rates from Nationwide.
I went from like 2.34% on half 1 (350k balance) to 4.74, the second chunk is at 2.44% (320k balance). On comparison sites I can see 4.69% for similar values, and on Nationwide itself they are offering 4.74 again. However the best rate I can lock in on half 2 is 4.84%.
I need to start overpaying I think! Am I right in thinking the longest term possible is "OK" as long as you overpay? That just means my contractual commitment is at its lowest?
I went from like 2.34% on half 1 (350k balance) to 4.74, the second chunk is at 2.44% (320k balance). On comparison sites I can see 4.69% for similar values, and on Nationwide itself they are offering 4.74 again. However the best rate I can lock in on half 2 is 4.84%.
I need to start overpaying I think! Am I right in thinking the longest term possible is "OK" as long as you overpay? That just means my contractual commitment is at its lowest?
Soldato
Ours has gone up 40% just painful to accept when you know it's all going on interest.
Also **** YBS, we were on 65.12% BTL, they said oh you will definitely get a better rate if you go to 65% LTV, but we can't tell you what it will be, so in the hope of a better monthly rate had to sink over £1500, the better rate... £10 less a month, so glad we put £1500 into that, that money would have been useful over the next 2 years when we have to come up with almost £500 extra a month.
just painful to accept when you know it's all going on interest.Also **** YBS, we were on 65.12% BTL, they said oh you will definitely get a better rate if you go to 65% LTV, but we can't tell you what it will be, so in the hope of a better monthly rate had to sink over £1500, the better rate... £10 less a month, so glad we put £1500 into that, that money would have been useful over the next 2 years when we have to come up with almost £500 extra a month.
Soldato
That is how I look at it yes.
If you overpay the difference between say the 25 year version and the 35 year one, you should wind up in the same sort of position.
I like the longer term as it gives me more flexibility, whilst also allowing me to pay it off sooner should I want to.
Ours has gone up 40%
Also **** YBS, we were on 65.12% BTL, they said oh you will definitely get a better rate if you go to 65% LTV, but we can't tell you what it will be, so in the hope of a better monthly rate had to sink over £1500, the better rate... £10 less a month, so glad we put £1500 into that, that money would have been useful over the next 2 years when we have to come up with almost £500 extra a month.
Yeah when we re-mortgage, we will be somewhere in the mid 70s LTV. I could push it below 75, but I can't see a difference in rates between 70 and 75. On that basis, I'm reluctant to lump sum over pay at all.
But that would surely be typical of most people.
35 years at 200k I guess isn't super edge case. But you'd hope. It was.
Maybe it isn't anymore.
But yeah it seem like for most circumstances the only way to double your monthly amount is super long rates. Which, I guess, if you're at the edge of affordability you may have to do.
Think so. As long as you're disciplined with money, it doesn't really matter and don't blow the spare on OF. And it's better to have that safety net with a choice to not over pay vs no choice to meet the minimum contractual m
Sorry my fault, I got the original figure wrong.
This is what it is from the daughter
It's nearly £800 a month now, 5 year fixed rate mortgage. It was £600 a month before hand, why?
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Do you mean super long terms? The longer the term, the less the monthly payment generally?
Ah yeah that's much more typical. 50pc seems to be what most coming of low rates would pay. Including me. If jumped to 5 it would be able 40-50pc ish
My bad m yeah long terms. A brain to finger fail.
Soldato
I think longer terms and larger mortgages are more common now though I don't have stats to prove it, just think it's likely as rates are higher and house prices are higher, so to make it possible you often need to lengthen the term.
Edit - this article seems to suggest average mortgage term is 32 years now for first time buyers: https://www.standard.co.uk/business...terest-rates-borrowing-property-b1145182.html
I have £167.5K remaining, currently paying £470 on 1% until late 2026 I think, so I'm not really overpaying currently. Redemption date is 2059 so 35 years remaining.
If I was to re-mortgage this today for 35 years at 5% I'd be going to £846 instead of £470, so not quite a 2x but not far off.
Even without overpaying anything extra, by this time in 2 years I'll have paid off some extra balance naturally, so I think I'll be closer to £160K left or just under. This would be £808 on the same basis as above thanks to lower balance remaining.
I'm hoping I can get nearer 4%, I will likely also start overpaying more again at least initially to drop the balance down a bit.
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Soldato
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Mostly legacy there are very few handed out these days apparently. Its a lot cheaper than renting even with the recent interest rate rises its roughly half the cost of equivalent rent or at least mine was
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Soldato
8.1% here (#Winning!)I wonder if I'm on the highest rate around here at 7.24% SVR
Due to circumstances I cba with the hassle of getting a new mortgage product and tbh, since there's less than 10K left, it's only risen by £20pm from the start of all this. Which I think also goes to put in perspective when 'the older generation' go on about the high rates of the 80's, but don't take into account it was on much lower amounts and how much more sensitive mortgages are now to interest rate rises.
Just over 3k left on the balance and we’ll be mortgage free by xmas so not really bothered.