Nationwide specifically state over £500 goes towards term.
Mortgage Rate Rises
- Thread starter glenimp617
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Soldato
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I think depends on the mortgage.
The one we were going to take on the house we nearly bought, overpayments reduced the term.
The one we have now on the house we actually bought is as you say, reducing monthly payments.
Like I said...
"... Changes to regular monthly payments.."
Which is what my letter is for since my monthly has gone down. This is the default action.
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Either way its easy to change to what you prefer.
Still tyring to come to a conclusion about the best thing to do.
Our interest only mortgage (with an offset savings account) finishes in 3 years. During that time our payments are likely to go up by a factor of five from where they were when base rate was less than 1%.
We have a whole heap of ISAs (all stocks and shares) that we have been setting up over the last 15 years to pay off the mortgage. 2 years ago we have about £50k over and above what we needed. Now that is only about £20k over and above.
The key issue is if the ISAs will outperform the interest rate on our mortgage.
My thought is that whilst interest rates won't directly impact on ISA values, business confidence/performance certainly will. I can see interest rates averaging out at >5% in the next 2 to 3 years along with a heavy period of economic pain. As a result I'm leaning to offsetting/paying off the mortgage balance. Being mortgage free would be a weight off our minds and certainly be a big life goal met.
Any thoughts on the ISA return 'vs' interest rates?
Our interest only mortgage (with an offset savings account) finishes in 3 years. During that time our payments are likely to go up by a factor of five from where they were when base rate was less than 1%.
We have a whole heap of ISAs (all stocks and shares) that we have been setting up over the last 15 years to pay off the mortgage. 2 years ago we have about £50k over and above what we needed. Now that is only about £20k over and above.
The key issue is if the ISAs will outperform the interest rate on our mortgage.
My thought is that whilst interest rates won't directly impact on ISA values, business confidence/performance certainly will. I can see interest rates averaging out at >5% in the next 2 to 3 years along with a heavy period of economic pain. As a result I'm leaning to offsetting/paying off the mortgage balance. Being mortgage free would be a weight off our minds and certainly be a big life goal met.
Any thoughts on the ISA return 'vs' interest rates?
Associate
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Personally i'm not confident at all that typical S&S ISA invested in UK/USA/world equities will outperform interest rates over the short/medium term.
In your circumstance I'd probably be looking to cash some of the ISA's in, or at least treat it more like you would a traditional pension nearing retirement date, & maybe move it to something like the lower risk Vanguard Lifestrategy funds if your provider has them (or hold as cash)
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"... if you make a payment before your usual monthly contractual payment is made..."
Surely an additional payment made at any time is before the date of a 'usual monthly contractual payment'.
Haha.
Actually I'm glad you made me read that part again as it saved me a phonecall to them.
They only treated part of my overpayment as an overpayment, and that statement clarifys why.
Think I'm coming down to the same page. Cash in enough to cover the mortgage and put it into the offset account. If market conditions take an unexpected real turn for the better we can always move £40k back into ISAs for a couple of years.
But the security of *knowing* that we have the mortgage covered regardless of what markets do is probably worthwhile.
We are Moving back to a historical nominal rate, those not fixed are in for some pain.
Wages are lower all relative
Caporegime
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Wow what the ****? really?
Yea i know. My point is, you cant just increase hose prices AND interest rates at the same time and wages not increasing as well.. its a balancing act
That’s completely normal, it’s to reprice the products. Unless they’ve explicitly said otherwise.
Not denying the economy is knackered of course
Edit - saw some statements on the other thread. It is a bit more out of the normal.
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Soldato
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Unless overridden, thats the default setting
Mine wasnt that however it was reduce payment amount, its quite likely it depends on when you took the mortgage out
Soldato
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Yes, this was super confusing when we were setting up ours. But we went with 1. I must confess we had not thought/known about your last point, but not paying for a while doesn't really seem like an option
Isn't option 3 a bit rubbish because you lose out on interest savings? IE has your money actually been put against your debt when they calculate interest daily?
No 3 is basically the same as 1, but they do not move your end date.
If you reduce the term it moves your end date so you are committed to paying back earlier. With 3 it remains the same even though you are likely to pay it off earlier if you are reducing term.
It still calculates your daily interest based on the loan outstanding.
If you have the cash to pay off your mortgage now, I think you would be mental not to. We are looking at a period of high interest rates but low growth... so a terrible time to have a mortgage and also a terrible time to hold stocks/equities investments. This is the time to pay down debts and keep a low profile
Some property brokers on twitter now asking what we would consider a house price crash.
No chance lol