Mortgage Rate Rises

[slinxy]

Interesting discussion the last page or so. I’m struggling with the same thing this very moment. I have a decent wedge in the stock market at the moment that’s just been going bonkers due to the current AI craze. We can now pay off the mortgage and be left with the same dollar amount we had in there 22 months ago. I’ve been wanting to do it since last year but keep opting to keep riding the pony ‘just one more month’, aka, pushing my luck. It’s all ETF investments so not massively risky, but we literally cannot earn what the stock market is raining down on us at the moment thanks to the Mag 7. But when AI goes ‘boom’, I’ll be a bit annoyed for the lost opportunity of getting this last monkey off my back.

It’s not the clever thing to do and in the very long run it’ll cost us 100s of thousands in lost gains, but we’re mortgage free next week if we wish. If our lifetimes were a 1000 years, it’s an easy decision. Not so clear at ages 44 and 41, respectively.

The interest we’re paying to the bank isn’t even a factor in comparison to the gains. It’s nothing, it’s peanuts. It’s just psychological.

Replying to myself with 2 months hindsight. 5 times running now. Once again thankful I didn't do this, the march is still all the way up.

I'll reply to you to make it out you're not bonkers... but the times that you're posting doesn't help your case... lol

It's worth doing the maths... IF you were to liquidate you would be saving the % of the whatever your mortgage rate is... how fast can you get that amount back into stocks and shares once you don't have to pay a mortgage and can use that amount to invest?

Also it's not a wholesale game... there's nothing stopping you from liquidating only a percentage of your stocks and shares, say just your stake and keeping you profit still in the market? it would remove your risk in the market and hopefully still make an increase in the market, it may even drop the intreast rate of your mortgage down a few % or/and allow you to pay less towards your mortgage again freeing up the cash to invest.

I'll certainly be doing the maths in a few years time when my mortgage deals expires and I'll be in the situ to hopefully be able to pay it all off...

As long as you are freeing up the money from paying your mortgage to re-invest in to the stock market, putting into your pension; which is even better because of the tax or even leaving your job to have a less stress life (cause that's a bigger monkey for more people), then personally I few % lost/gain here or there isn't a biggie imho.

 

[regulus]

I'll reply to you to make it out you're not bonkers... but the times that you're posting doesn't help your case... lol

It's worth doing the maths... IF you were to liquidate you would be saving the % of the whatever your mortgage rate is... how fast can you get that amount back into stocks and shares once you don't have to pay a mortgage and can use that amount to invest?

Also it's not a wholesale game... there's nothing stopping you from liquidating only a percentage of your stocks and shares, say just your stake and keeping you profit still in the market? it would remove your risk in the market and hopefully still make an increase in the market, it may even drop the intreast rate of your mortgage down a few % or/and allow you to pay less towards your mortgage again freeing up the cash to invest.

I'll certainly be doing the maths in a few years time when my mortgage deals expires and I'll be in the situ to hopefully be able to pay it all off...

As long as you are freeing up the money from paying your mortgage to re-invest in to the stock market, putting into your pension; which is even better because of the tax or even leaving your job to have a less stress life (cause that's a bigger monkey for more people), then personally I few % lost/gain here or there isn't a biggie imho.

Haha. It's more of a prompt for myself not to do the silly thing and sell. But yep, talking to myself is a bit bonkers.

It's difficult to do any maths unless I know what the next 12 months look like. Too many variables I don't control. I know only my mortgage fix rate and the interest is a non-issue. My outstanding balance, while not insignificant, is quite low.

The issue is the market buoyancy and riding the pony for as long as I can. Hence the 'bonkers' prompt to myself as a record of hanging in there and not selling. Something I wanted to do last year and would've heavily paid the price for doing in lost gains.

It's all a guess and emotional at the end of the day. I think I'm going to hang in there and keep chipping away at the mortgage and hope the market keep creeping up

 

[HungryHippos]

You can't really time the market tbh, even if you think it's time to get off the ride, it could keep going without you. if you do take cash out and pay off the mortgage, what will you do with the money that you don't pay on the mortgage? the answer is probably re-invest it, but the price you pay could be steeper than when you sold.

I'm not quite in your shoes as I've only recently gotten onto the ride, but my plan is to overpay my mortgage some when the deal I'm on ends.

I'm probably not going to pull investments to do it, but I'll keep on doing bits of everything instead with new money that comes in, some to investments/stocks, some to SIPP, some to mortgage over payment.

Saying all of this, having mortgage paid off is a goal of mine, but a somewhat longer term one, and I'm mainly wanting to avoid higher monthly re-payments so I have more flex in what I put my money towards. You could sell some (enough to take a bite out of it) so you're not fully committing to one thing.

 

[EvilRob]

I'm probably not going to pull investments to do it, but I'll keep on doing bits of everything instead with new money that comes in, some to investments/stocks, some to SIPP, some to mortgage over payment.

Similar really. At one point I thought I would try to pay off my mortgage entirely when current fixed term ends in 3 years (~14 years early). Now I don't really want to give up the money accumulating in ISA as I'd like to use it to retire and bridge the gap to 55 if it all works out. I'll probably continue to overpay the mortgage, just at the current slower pace.

 

[MrMarvelous]

Mine is expiring at the end of this month.

Had 5 year fixed at 2.03%, this has now gone up to 4.49%. Shopped around but went with my mortgage adviser as he had the best rates.

Was paying £367 per month, will now be paying £430+ I think - utterly ridiculous.

 

[EvilRob]

Was paying £367 per month, will now be paying £430+ I think - utterly ridiculous.

Sounds like an enviable position to be in tbh.

 

[HungryHippos]

Mine is expiring at the end of this month.

Had 5 year fixed at 2.03%, this has now gone up to 4.49%. Shopped around but went with my mortgage adviser as he had the best rates.

Was paying £367 per month, will now be paying £430+ I think - utterly nidicolous.

That's not too bad I worked out mine would go from £470 to £850 when my term ends. This is moving from 1% to 4.5%.

If I overpay say £10K off the balance when the time comes to switch, it goes to £800 per month instead.

£15K overpayment and I'm at £775.

I'd probably overpay whatever takes me to say £1K on the mortgage, so if my cost is £800, I'd pay £1K and have £200 overpayment, this should in theory gradually reduce the balance as well and the future payments whilst allowing me some capital to deploy to other things and investments still.

Maybe by then interest rates would have cooled off a bit, 3% and I'm back at a more manageable £700 even without overpaying anything extra before it starts.

 

[MrMarvelous]

Thanks for your replies guys. My mortgage is with HSBC and i've been told that I won't be able to do an overpayment without a penalty.

What he recommended is to call HSBC on the last day of my current rate mortgage (31st of July) and do a payment to get it back down to what it used to be. Apparently you can only do this on the day with HSBC so i'm tempted to put a few thousand down to get it back to around £360.

Life seems to be getting worse and more expensive by the day in this country.

 

[regulus]

You can't really time the market tbh, even if you think it's time to get off the ride, it could keep going without you. if you do take cash out and pay off the mortgage, what will you do with the money that you don't pay on the mortgage? the answer is probably re-invest it, but the price you pay could be steeper than when you sold.

I'm not quite in your shoes as I've only recently gotten onto the ride, but my plan is to overpay my mortgage some when the deal I'm on ends.

I'm probably not going to pull investments to do it, but I'll keep on doing bits of everything instead with new money that comes in, some to investments/stocks, some to SIPP, some to mortgage over payment.

Saying all of this, having mortgage paid off is a goal of mine, but a somewhat longer term one, and I'm mainly wanting to avoid higher monthly re-payments so I have more flex in what I put my money towards. You could sell some (enough to take a bite out of it) so you're not fully committing to one thing.

I'm only taking enough to pay it off. Leaving the rest as is.

Anyway, I probably won't do it so it's all moot anyway.

 

[Tom|Nbk]

Mine is expiring at the end of this month.

Had 5 year fixed at 2.03%, this has now gone up to 4.49%. Shopped around but went with my mortgage adviser as he had the best rates.

Was paying £367 per month, will now be paying £430+ I think - utterly ridiculous.

You've had it good for much longer than many many others. I wouldn't be complaining at that TBFH.

 

[b0rn2sk8]

Your mortgage must be tiny to only be paying £430/month. Nice problem to have.

The cheapest one bed apartment around here is £825/month to rent and I’m not even London/South east.

 

[slinxy]

Mine is expiring at the end of this month.

Had 5 year fixed at 2.03%, this has now gone up to 4.49%. Shopped around but went with my mortgage adviser as he had the best rates.

Was paying £367 per month, will now be paying £430+ I think - utterly ridiculous.

overrall yours is still cheaper than mine.

I has a 5 year fixed at 2.99% (+0.96% difference to yours) paying £575.92
it went up to 4.01% (-0.48% difference to yours) paying £689.92


I'm stil paying over £250 pounds intreast a month... hence why I'm making overpayments to bring the amount down.

 

[MrMarvelous]

Your mortgage must be tiny to only be paying £430/month. Nice problem to have.

The cheapest one bed apartment around here is £825/month to rent and I’m not even London/South east.

That's why most Southerners are moving up North for cheaper properties, then driving the prices up here too. I don't know your circumstances - have you been renting most of your life or could you put some money down for a mortgage?

overrall yours is still cheaper than mine.

I has a 5 year fixed at 2.99% (+0.96% difference to yours) paying £575.92
it went up to 4.01% (-0.48% difference to yours) paying £689.92


I'm stil paying over £250 pounds intreast a month... hence why I'm making overpayments to bring the amount down.

What lender is your 4.01% rate with? I think i'll make an overpayment at the end of the month like I said before, would like to get it back down to around £350ish.

 

[b0rn2sk8]

That's why most Southerners are moving up North for cheaper properties, then driving the prices up here too. I don't know your circumstances - have you been renting most of your life or could you put some money down for a mortgage?

I don’t rent, I was just pointing out that a ~£400/month mortgage is tiny pretty much anywhere in the U.K. by today’s standards. Renting the most basic property in my area would double your costs and where I live isn’t expensive in terms of U.K. property prices.

 

[slinxy]

That's why most Southerners are moving up North for cheaper properties, then driving the prices up here too. I don't know your circumstances - have you been renting most of your life or could you put some money down for a mortgage?



What lender is your 4.01% rate with? I think i'll make an overpayment at the end of the month like I said before, would like to get it back down to around £350ish.

Co-Op... but it's swings and roundabouts... I must have got my mortage before you and was only offered one at 2.99% and you got yours cheaper. Mine expired and renewed last year before it went back up again.

 

[HoneyBadger]

That's why most Southerners are moving up North for cheaper properties, then driving the prices up here too. I don't know your circumstances - have you been renting most of your life or could you put some money down for a mortgage?



What lender is your 4.01% rate with? I think i'll make an overpayment at the end of the month like I said before, would like to get it back down to around £350ish.

MrsHB and I moved from the south East (Kent) to Yorkshire. We sold 2 houses in Kent, one of those paid for a 4 bed cottage, with a separate 2 bed annexe on just over an acre of land. Mortgage free at 45.

 

[jpaul]

so, I just need to find a job up North, away from Cambridge
... but labour will soon be levelling up, hopefully not also removing the hills up North, though.

 

[Angst]

Mine is expiring at the end of this month.

Had 5 year fixed at 2.03%, this has now gone up to 4.49%. Shopped around but went with my mortgage adviser as he had the best rates.

Was paying £367 per month, will now be paying £430+ I think - utterly ridiculous.

Sounds like a dream to me. I bought just under 3 years ago on a 2.99% 2 year fix, when it expired in December it went up to around 6% taking the payments from just over 900 to 1370 a month. The amount mine has gone up by is as much as your total monthly payment.

 

[slinxy]

so, I just need to find a job up North, away from Cambridge
... but labour will soon be levelling up, hopefully not also removing the hills up North, though.

<snip>

Where is this info from and does it dive deeper into the areas?

 

[MrMarvelous]

MrsHB and I moved from the south East (Kent) to Yorkshire. We sold 2 houses in Kent, one of those paid for a 4 bed cottage, with a separate 2 bed annexe on just over an acre of land. Mortgage free at 45.

Well done! Must feel amazing having paid it off, it's really the only debt I have hanging over my head.