That's the temptation. Could also be a benefit, getting the over payment out of the ISA is a lot easier than getting it out of the mortgage should you need it in an "emergency"
.Mortgage Rate Rises
- Thread starter glenimp617
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That's the temptation. Could also be a benefit, getting the over payment out of the ISA is a lot easier than getting it out of the mortgage should you need it in an "emergency"
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try explaining that in the savings thread lol
some posters still want to overpay their 1.x% mortgage i have no clue why
Psychological thing I'd say. I wanted to do the same when I first got the mortgage but my mom kept saying it was a bad idea since it was so cheap and I should invest instead etc. - which is what I did do thankfully, but there was that mental thing of "reduce money wasted in interest and pay extra towards it ".try explaining that in the savings thread lol
some posters still want to overpay their 1.x% mortgage i have no clue why
Soldato
Would you mind sharing the spreadsheet?
Man of Honour
Anyway, pls can the base rate coming down continue and actually have an impact on lender interest rates? Make Mortgages Cheap Affordable(?) Again! I would like that very much. Thanks.
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Man of Honour
If you plug in an arguably conservative expected return based on the average global stock market returns for the last 50 years you will find you end up with approx almost triple the upside. This value is ~5-5.5% post inflation (~7-7.5% raw, for your calcs). Of course this isn't for everyone, but if one is considering the long term view that thumbing money in to a relatively illiquid asset such as a property realistically is, one shouldn't be too bothered about inevitable stock market volatility.
Just send me the cash each month and I'll send you a bigger number back
Soldato
Doesn't sound right to me.
It doesn't matter if the amount is a reduction in A or an increase in B, its the same amount being evaluated.
You will get compound interest savings on 1 and compound interest on the other.
Can't validate as your numbers could be all over but £233-£337 is an average of £285. So thats depositing (or overpaying) around £6800 over two years.
As its a steady stream and only 2 years a simple check of £6800 x 5.17% /2 is £175 interest at 5.17%. It will be a little higher with compounding but not £721.
So neither figure on a quick check sounds likely to be correct to me
But maybe the £248 is if the repayments skew towards the top end of your additional range a lot more than the bottom.For perspective, just added a little extra, the first months £285 will earn £30 interest over 2 years. The same £285 will save £24 mortgage interest. Which includes compounding (but is rounded for simplicity).
I'd like to but obviously contains number pertinent to me plus the foibles of my mortgage might not apply to yours. I'll try to explain the calcs in a reply to Mercenary Keyboard Warrior.
Totally psychological and I get it. It was the reason I made the spreadsheet - the desire to see the mortgage drop a grand each month and paying the bank less interest - but it would be doing myself out of interest.
Beat it! I was here first!
Doesn't sound right to me.
It doesn't matter if the amount is a reduction in A or an increase in B, its the same amount being evaluated.
You will get compound interest savings on 1 and compound interest on the other.
Can't validate as your numbers could be all over but £233-£337 is an average of £285. So thats depositing (or overpaying) around £6800 over two years.
As its a steady stream and only 2 years a simple check of £6800 x 5.17% /2 is £175 interest at 5.17%. It will be a little higher with compounding but not £721.
So neither figure on a quick check sounds likely to be correct to me
For perspective, just added a little extra, the first months £285 will earn £30 interest over 2 years. The same £285 will save £24 mortgage interest. Which includes compounding (but is rounded for simplicity).
Are you doubting my spreadsheet?
I would (and still am to a degree)!I think it comes down to the differences of how and when mortgage interest is applied to the mortgage compared to the cash ISA.
I'll have a look again at it later and see if I've made an error....
Very much seems like base rate is going to fall and mortgage rates are creeping up. So worst of both worlds.
Plus seems like job losses and stagnation are also on the cards.
I feel this proves the UK has exhausted its ability to tax the ordinary person. These taxes are probably the most gentle you can muster with impact on the individual median worker. Yet they are predicted to cause mild damage.
Kind of scary really.
Genuinely don't know what I'd do if I was in power..
Obviously you want to stimulate growth.. But how? No idea!
On question time it came up about taxing wealth. And the labour guy said you just can't. It just doesn't work.
Is that actually true? Or is it just everyone is too scared to do it?
Plus seems like job losses and stagnation are also on the cards.
I feel this proves the UK has exhausted its ability to tax the ordinary person. These taxes are probably the most gentle you can muster with impact on the individual median worker. Yet they are predicted to cause mild damage.
Kind of scary really.
Genuinely don't know what I'd do if I was in power..
Obviously you want to stimulate growth.. But how? No idea!
On question time it came up about taxing wealth. And the labour guy said you just can't. It just doesn't work.
Is that actually true? Or is it just everyone is too scared to do it?
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Soldato
I am indeed. Check my basic quick check for the sort of number you should be generating.Are you doubting my spreadsheet?
It shouldn't, thats the point of AER (Annual equivalent rate).
AER could be 5%, monthly interest would be calculated at something like 4.75%, daily would be 4.5% (very broad numbers, you can calculate them down to say 4 decimals fairly easily in excel)
If your going to that detail remember to include leap year differences
But personally I would just calculate it on monthly basis seeing as your only paying extra once a month the few days difference will be pretty insignificant over 2 years.
Like I said difference between your rates is going to gain you about £6 on the first months savings vs paying off the mortgage. That will go down every month.
I suspect the wealthy are best placed to use vehicles and loopholes to avoid it. Even if you try to close said loopholes their accountants will just find creative ways around it.
Caporegime
I think the only way is mass house building like after the war. If house prices came down and houses were simply a place to live then it would help our children and grand children. Everyone would have more money to spend and it would help out the economy massively.
No one has the balls to do it though because it effects everyone that owns property as you are reducing their net wealth.
HS2 for example is 200 billion once done. Government has plenty of land mothballed like former RAF bases etc. That would be an extra 1.3 million homes if you could build one per 150k.
This isn't a UK problem either but pretty much all of the developed western world is in this mess.
Also bringing all utilities back under state control where all profits are for infrastructure only. You could abolish the royal family and asset strip everything they own to fund the purchase of them
.Yeah house prices are a trap. Once you're in the system you want it to go up. But it's paper wealth. Most never get to use it.I think the only way is mass house building like after the war. If house prices came down and houses were simply a place to live then it would help our children and grand children. Everyone would have more money to spend and it would help out the economy massively.
No one has the balls to do it though because it effects everyone that owns property as you are reducing their net wealth.
HS2 for example is 200 billion once done. Government has plenty of land mothballed like former RAF bases etc. That would be an extra 1.3 million homes if you could build one per 150k.
This isn't a UK problem either but pretty much all of the developed western world is in this mess.
Also bringing all utilities back under state control where all profits are for infrastructure only. You could abolish the royal family and asset strip everything they own to fund the purchase of them
As you say, wouldn't it be amazing to not want it need housing to be an asset.
If rent/mortgage wasn't su h a burden when you were young life wouldn't be half as difficult on a median wage.