Spreadsheets to Calculate Mortgage Options

[pistonheadforum]

Hello,

Morgate coming to end of fixed rate and going onto standard rate. Monthly amount will change by 7% if going on the standard rate.

I'm in a position of being able to pay off a chunk (not all) and to overpay monthly going forward. I'm looking to run some simulations of staying on standard and heavily overpaying vs paying off a chunk, fixing for 3 or 5 years and saving to pay off another chunk after the end of the new fixed term.

Where will put me on the best position in 3 or 5 years?

If I do the latter, then it will obviosly reduce the monthly amount (potentially 5/8th current amount) which would mean saving more each month (3/8th plus the overpayment amount I can afford that month). Does any of that make sense? Hope so!

Is is best to say on standard and heavily overpay or fix then pay a chunk off at the end. Something that will allow me to see how compound interest on a reducing amount will help.

Many thanks

Edited by pistonheadforum on Thursday 27th August 14:33

[louiebaby]

Are you eligible for an offset mortgage?

This seems to give best of all worlds, if you can trust yourself not to go TVR shopping with the savings account...

[pistonheadforum]

louiebaby said:

Are you eligible for an offset mortgage?

Thanks - not sure how this works I'm afraid ... is it not based on a decent savings interest rate which nobody is giving?

Thanks for idea though.

[craigjm]

Most fixed rates also allow you to overpay they just usually limit it to say 10% of capital

[louiebaby]

pistonheadforum said:

louiebaby said:

Are you eligible for an offset mortgage?

Thanks - not sure how this works I'm afraid ... is it not based on a decent savings interest rate which nobody is giving?

Thanks for idea though.

As I understand it, it would work like this:

House value £250k with 60% LTV = borrowed amount is £150k.

Spend £125k paying off your old mortgage, leaving you with a savings account with £25k.

Mortgage account = £150k debit
Savings account = £25k credit

Net = £125k debit. Which you pay the interest on each month.

As you put more into your savings account, the net debt reduces, so you pay less interest, but you can always dip into the savings account if the boiler blows up. Like over-paying, but with the ability to get it back out easily.

You may be able to link your current account too.

[geeman237]

pistonheadforum said:

Hello,

Morgate coming to end of fixed rate and going onto standard rate. Monthly amount will change by 7% if going on the standard rate.

I'm in a position of being able to pay off a chunk (not all) and to overpay monthly going forward. I'm looking to run some simulations of staying on standard and heavily overpaying vs paying off a chunk, fixing for 3 or 5 years and saving to pay off another chunk after the end of the new fixed term.

Where will put me on the best position in 3 or 5 years?

If I do the latter, then it will obviosly reduce the monthly amount (potentially 5/8th current amount) which would mean saving more each month (3/8th plus the overpayment amount I can afford that month). Does any of that make sense? Hope so!

Is is best to say on standard and heavily overpay or fix then pay a chunk off at the end. Something that will allow me to see how compound interest on a reducing amount will help.

Many thanks

Edited by pistonheadforum on Thursday 27th August 14:33

These are from US websites, but it might be helpful for you.
https://www.daveramsey.com/mortgage-payoff-calcula...
https://www.nerdwallet.com/mortgages/refinance-cal...
Just remember to use the US date format, MM/DD/YYYY

[skeeterm5]

There is a pretty handy calculator on the Nationwide site that lets you calculate the impact of over payments and lump sum reductions.

S

[IanJ9375]

MSE website has the overpayments calculator so you can do what you need here

https://www.moneysavingexpert.com/mortgages/mortga...

[rfsteel]

Check out Locoblade's version that started on MSE

http://locostfireblade.co.uk/spreadsheet/Index.htm...

[rich888]

IanJ9375 said:

MSE website has the overpayments calculator so you can do what you need here

https://www.moneysavingexpert.com/mortgages/mortga...

+1

Was just about to suggest the Money Saving Expert mortgage overpayment calculator which is supremely easy to use. Is quite enlightening to watch how seemingly insignificant regular monthly overpayments can make quite a dent in the final figures!

Might be worthwhile contacting your lender to see if there is any upper limit on making overpayments, I spoke to my lender a few days ago to ask the very same question and they said that there were no overpayment limits on the standard mortgage, though ensure you don't accidentally pay it off because that might incur early redemption fees - just ring them up and ask.

[IanJ9375]

rich888 said:

+1

Was just about to suggest the Money Saving Expert mortgage overpayment calculator which is supremely easy to use. Is quite enlightening to watch how seemingly insignificant regular monthly overpayments can make quite a dent in the final figures!

Might be worthwhile contacting your lender to see if there is any upper limit on making overpayments, I spoke to my lender a few days ago to ask the very same question and they said that there were no overpayment limits on the standard mortgage, though ensure you don't accidentally pay it off because that might incur early redemption fees - just ring them up and ask.

Agreed!

Yes it's always worth asking about any overpayment, from memory my Nationwide one is 10% of the original loan amount.

[blueg33]

Not hard to write your own sheet.

I am an excel idiot and have written financial models for 60 years structured finance for property

If you write your own it helps you understand whats going on. Its easy enough if interest is calculated monthly, its more annoying if its a daily calc as you end up with a big sheet

[pistonheadforum]

blueg33 said:

Not hard to write your own sheet.

I am an excel idiot and have written financial models for 60 years structured finance for property

If you write your own it helps you understand whats going on. Its easy enough if interest is calculated monthly, its more annoying if its a daily calc as you end up with a big sheet

Probably the right answer! Will have a go and see what I can come up with. All the other suggestions were good but I think in need something bespoke.

[Stevemr]

I used to be a mortgage broker, took early retirement 3 years ago.
I think you are weighing up two options.
1-fixing for another 2-3 year period and being restricted on how much you can overpay? Typically limited to 10% of mortgage balance.
2 staying on standard variable rate and being able to overpay however much you want.
In this scenario I would have recommended a different option. Some lenders have a tracker rate which has no limit to overpayments. I would strongly recommend speaking to a broker to see who currently has such a deal and which is best.
I do not have any link or association with sarnie who posts on here, but I have never disagreed with any advice he has given on here and would suggest you contact him.
The lender I usually used in this scenario was nationwide who currently have tracker rate 1.74% - 2 year deal no fee up to 60% ltv, but there may be better options. Really worth speaking to a broker.