Overpayment now or a bulk payment at end of mortgage deal

[vinnie83]

All that jazz said:

Do you actually go on the SVR though? Shirley if you speak to your current lender and tell them x has offered you a better deal so you're planning to switch them, they are unlikely to say "OK, t'ra!" if you have a solid repayment history and would offer you a deal to stay with them?

If you're going to do that, why not compare what other lenders are offering at the same time and go for the most financially beneficial option - which is exactly what some are saying is a bank ploy to con more money out of you.

It's a simple calculation: Cost to change - total saving = net saving.

Do that for each option you have, and go for the one saving the most. Or get a broker to do it all for you.

ETA : retention products are set in stone, not negotiable.

Edited by vinnie83 on Tuesday 20th September 17:12

[mcflurry]

IMHO it's not that hard to check by taking the fixed rate's payments plus any fees vs the cost of the SVR over the same period.

The unknown piece is whether the SVR will change vs how much a fix is worth to you.

Some usual stuff at https://www.moneyadviceservice.org.uk/en/categorie... and
https://www.moneyadviceservice.org.uk/en/tools/mor...

[All that jazz]

vinnie83 said:

All that jazz said:

Do you actually go on the SVR though? Shirley if you speak to your current lender and tell them x has offered you a better deal so you're planning to switch them, they are unlikely to say "OK, t'ra!" if you have a solid repayment history and would offer you a deal to stay with them?

If you're going to do that, why not compare what other lenders are offering at the same time and go for the most financially beneficial option - which is exactly what some are saying is a bank ploy to con more money out of you.

It's a simple calculation: Cost to change - total saving = net saving.

Do that for each option you have, and go for the one saving the most. Or get a broker to do it all for you.

You seem to be forgetting the circumstances surrounding the OP. If it wasn't for those there wouldn't be any reason for this thread...

[vinnie83]

All that jazz said:

vinnie83 said:

All that jazz said:

Do you actually go on the SVR though? Shirley if you speak to your current lender and tell them x has offered you a better deal so you're planning to switch them, they are unlikely to say "OK, t'ra!" if you have a solid repayment history and would offer you a deal to stay with them?

If you're going to do that, why not compare what other lenders are offering at the same time and go for the most financially beneficial option - which is exactly what some are saying is a bank ploy to con more money out of you.

It's a simple calculation: Cost to change - total saving = net saving.

Do that for each option you have, and go for the one saving the most. Or get a broker to do it all for you.

You seem to be forgetting the circumstances surrounding the OP. If it wasn't for those there wouldn't be any reason for this thread...

I was responding to the comment of another poster about the general benefits/drawbacks of staying on SVR vs. remortgaging, not relating to the OP. His question has already been answered.

[d8mok]

Its now a few months further on and remortgage time is getting closer. I can do it from July onwards according to Nationwide.


I didn't end up paying another £10k off just yet but money is there waiting to be used when i decide to.

So my question is.... if i just simply renew online with Nationwide (as a execution only i believe the term used is) on to a different product will I have to go through the pain of a full application or will it be a 5 minute job? All the rules seem to be constantly changing so thought its best to ask.

[Casa1862]

d8mok said:

Its now a few months further on and remortgage time is getting closer. I can do it from July onwards according to Nationwide.


I didn't end up paying another £10k off just yet but money is there waiting to be used when i decide to.

So my question is.... if i just simply renew online with Nationwide (as a execution only i believe the term used is) on to a different product will I have to go through the pain of a full application or will it be a 5 minute job? All the rules seem to be constantly changing so thought its best to ask.

5 min job.

[d8mok]

exactly what i wanted to hear. thanks for the clarification

[_Exocet_]

It was a 5 minute job for me.

When calculating the costs it worked out cheaper to pay a slightly higher interest rate across the full term of the fixed rate and no 1k fee than take the lowest interest rate with fee. Always worth checking.

[DonkeyApple]

_Exocet_ said:

It was a 5 minute job for me.

When calculating the costs it worked out cheaper to pay a slightly higher interest rate across the full term of the fixed rate and no 1k fee than take the lowest interest rate with fee. Always worth checking.

Yup. Like SVR is fundamentally a tool to steer the majority into the repeating fee structure of the short term fix, the valuation/fee waiver is a brilliant tool to then keep the consumer where they are.

This is still a market in need of continued regulatory tightening of incentive practices.

[Rick101]

Have considered this twice and both times have stayed on SVR.

One very important point to note is that they know the SVR is high, much like 'list' on a car, so offer a sizeable discount.
I think the SVR with out is around 5%. With the discount, I think we pay we pay about 2%.

[p1doc]

my deal runs out next aug but hoping to get mortgage paid off year after that so could be worth getting retention deal/svr saving reapplication and coughing up money for fix-interesting

[vinnie83]

d8mok said:

will I have to go through the pain of a full application or will it be a 5 minute job? All the rules seem to be constantly changing so thought its best to ask.

If you're only switching rates and keeping everything else the same (term and borrowing amount) then you don't need to re-apply. If you change the terms of the loan, a new application will be required.

Rick101 said:

Have considered this twice and both times have stayed on SVR.

One very important point to note is that they know the SVR is high, much like 'list' on a car, so offer a sizeable discount.
I think the SVR with out is around 5%. With the discount, I think we pay we pay about 2%.

You have not stayed on the SVR then, you've opted for a discounted variable rate - the SVR in your example above would be the 5%.

For those of you mentioning the costs to fix or secure a special deal, the whole point of using an advisor is that we calculate just this for you - and tell you which product is actually the cheapest (not the lowest headline rate) over the term, taking into account any costs to change.

I have on numerous occasions significantly bettered existing borrower retention deals, and very rarely fail to better a SVR mortgage (taking into account costs to change).

a) Just because it was so for someone else, doesn't mean it will be so for you. People always assume what worked for them is the case for everyone, ignoring the fact that everybody is very different.

b) You have to assume these people were right in the fist place. I'm sure many have done their research and made the correct decision, but many will claim to have done so and have inadvertently cost themselves a lot of money - believe me, I know - if I had a penny for everytime someone told me "you won't better what I've found"... and I did.

[vinnie83]

p1doc said:

my deal runs out next aug but hoping to get mortgage paid off year after that so could be worth getting retention deal/svr saving reapplication and coughing up money for fix-interesting

Retention deals also have tie in clauses. You would need to look at any SVR or lifetime tracker deals with no Early Redemtion Clause (ERC).

• the above is not advice, just information.

[p1doc]

vinnie83 said:

Retention deals also have tie in clauses. You would need to look at any SVR or lifetime tracker deals with no Early Redemtion Clause (ERC).

• the above is not advice, just information.

on my paperwork says 3% ERC runs out next aug when my deal runs out and I am converted to SVR with no ERC but hopefully plan to pay off end of next year/start of next with ins policy reaching maturity so no real point paying for deal with £1000 fix as likely more than ERC
also meant to say unluckily picked 10 yr fix just before interest rates dropped so my fix is well above svr ie 6.09%

Edited by p1doc on Tuesday 11th April 10:57

[vinnie83]

p1doc said:

vinnie83 said:

Retention deals also have tie in clauses. You would need to look at any SVR or lifetime tracker deals with no Early Redemtion Clause (ERC).

• the above is not advice, just information.

on my paperwork says 3% ERC runs out next aug when my deal runs out and I am converted to SVR with no ERC but hopefully plan to pay off end of next year/start of next with ins policy reaching maturity so no real point paying for deal with £1000 fix as likely more than ERC
also meant to say unluckily picked 10 yr fix just before interest rates dropped so my fix is well above svr ie 6.09%

Edited by p1doc on Tuesday 11th April 10:57

Yep so you should ask the lender if they have any discounted rates that have no charges to arrange and no ERC, or consider sticking on the SVR for the rest. It all depends on the balance - if you have an interest only mortgage (sounds possible as you mention maturity of a policy) then it MAY still be worth looking for a deal with a fee/tie in for 2 years as if you have a larger balance then in the 1.5-2 years it takes until the policy matures, you may save a worthwhile sum.

If the balance is low however, it's less likely to be worthwhile doing anything.

[d8mok]

vinnie83 said:

d8mok said:

will I have to go through the pain of a full application or will it be a 5 minute job? All the rules seem to be constantly changing so thought its best to ask.

If you're only switching rates and keeping everything else the same (term and borrowing amount) then you don't need to re-apply. If you change the terms of the loan, a new application will be required.

We will be reducing the borrowing amount prior by making a overpayment , but we will also be reducing the term at remortagage time. Will this need a full applicatio then?

Maybe i'd be better keeping the same term and overpaying again.

[p1doc]

balance is low-well below £100,000 as overpaid since mortgage started ,not interest only but ins policy was stand alone policy that just happens to mature 4 months after ERC stops so some pure luck planning lol
SVR or discount looks more likely for me to avoid being tied in for a couple of years but again will have to see what SVR is next year but doubt much change hopefully

[vinnie83]

d8mok said:

We will be reducing the borrowing amount prior by making a overpayment , but we will also be reducing the term at remortagage time. Will this need a full applicatio then?

Maybe i'd be better keeping the same term and overpaying again.

Term reduction as a result of overpayment is not a problem. However, if you want to reduce your term more than the overpayment would naturally result in, then yes.

ETA: if you're on a SVR, it's unlikely there will be a restriction on overpayment. Therefore, you don't need to further reduce the term, simply make overpayments. Speak to the bank to double check.

p1doc said:

balance is low-well below £100,000 as overpaid since mortgage started ,not interest only but ins policy was stand alone policy that just happens to mature 4 months after ERC stops so some pure luck planning lol
SVR or discount looks more likely for me to avoid being tied in for a couple of years but again will have to see what SVR is next year but doubt much change hopefully

If the ERC finishes 4 months before the policy matures, then there's absulutely no point in considering switching to anything unless they have a fee free transfer product with no ERC of its own.

May be better just to sit on SVR and then pay off 4 months later!

Edited by vinnie83 on Tuesday 11th April 17:58

[p1doc]

vinnie83 said:

If the ERC finishes 4 months before the policy matures, then there's absulutely no point in considering switching to anything unless they have a fee free transfer product with no ERC of its own.

May be better just to sit on SVR and then pay off 4 months later!

Edited by vinnie83 on Tuesday 11th April 17:58

that is what I was thinking-no point throwing more money at a product when I can use that money to pay it off
when I make an overpayment they always ask if I want term or monthly amount reduced-up till 3 yrs ago I could pick term with no probs so only got 5yrs left on mortgage but bizarrely 3 yrs ago still offer me options but if I pick term reduction(which as I understand is better financially for me) they say I have to apply for remortgage calculation while can apply monthly reduction immediately?!?
thanks

[vinnie83]

p1doc said:

vinnie83 said:

If the ERC finishes 4 months before the policy matures, then there's absulutely no point in considering switching to anything unless they have a fee free transfer product with no ERC of its own.

May be better just to sit on SVR and then pay off 4 months later!

Edited by vinnie83 on Tuesday 11th April 17:58

that is what I was thinking-no point throwing more money at a product when I can use that money to pay it off
when I make an overpayment they always ask if I want term or monthly amount reduced-up till 3 yrs ago I could pick term with no probs so only got 5yrs left on mortgage but bizarrely 3 yrs ago still offer me options but if I pick term reduction(which as I understand is better financially for me) they say I have to apply for remortgage calculation while can apply monthly reduction immediately?!?
thanks

Then why don't you accept the reduction in payment then overpay monthly - assuming there's no ERC if you stay on the SVR?

(This is not advice but general info)

ETA:

So for example:

If your term reduction would have dropped the term to 2.5 years and cost £500 a month, but they insist you should take the reduction in payment - say to £250 a month whilst keeping your mortgage at 5 years.

In order to pay the mortgage off in 2.5 years, you simply need to make the overpayment of £250 a month to equal what the reduced term payment would have been.

The net result would be the same.

This assumes no restriction in overpayment and interest calculated daily.

Edited by vinnie83 on Wednesday 12th April 13:33