Can we talk mortgages in general?
Discussion
Hey Everyone,
My mortgage is coming to the end of the lock-in period (or whatver the term). My situation is much better than it was back then. This is the only debt I have.
House value is ~ £125,000
Remaining mortgage value £54,000
Term remaining is (as it stands) 16 years, 7 months.
Off hand I have no idea on interest rate, but nothing horrific.
Monthly payments ~ £430
This time gone, I just want it gone as soon as possble without being silly about it. Ideally i'd like in gone in about 7 years max.
The main things I want to ask:
"Is there a producrt or range of products that allow me to offset my cash at the bank (Approx £7,000) against the mortgage whilst also allowing massive overpayments."
To give some idea, at the moment I am often seeing £1500 monthly surplus of cash that could otherwise go to the mortgage but the penalties for overpayment disuade me from doing this. Not gaurenteed to be every month but frequently whilst not having to commit to those huge chunky payments of £1800 per month, ie I want the flexability.
My mortgage is coming to the end of the lock-in period (or whatver the term). My situation is much better than it was back then. This is the only debt I have.
House value is ~ £125,000
Remaining mortgage value £54,000
Term remaining is (as it stands) 16 years, 7 months.
Off hand I have no idea on interest rate, but nothing horrific.
Monthly payments ~ £430
This time gone, I just want it gone as soon as possble without being silly about it. Ideally i'd like in gone in about 7 years max.
The main things I want to ask:
"Is there a producrt or range of products that allow me to offset my cash at the bank (Approx £7,000) against the mortgage whilst also allowing massive overpayments."
To give some idea, at the moment I am often seeing £1500 monthly surplus of cash that could otherwise go to the mortgage but the penalties for overpayment disuade me from doing this. Not gaurenteed to be every month but frequently whilst not having to commit to those huge chunky payments of £1800 per month, ie I want the flexability.
Edited by anonymous-user on Tuesday 29th December 21:22
Oddly enough, it's called an offset mortgage.
IME most have the usual 10% annual overpayment limit, but that doesn't stop you offsetting the whole lot if you wish, which is something I've done in the past.
Not without risk of course, but would sticking all the overpayments into an ISA wrapped tracker fund be a better bet? It certainly would have been for me over the years, but I was/still am very risk averse if it's cash I would rather not lose.
IME most have the usual 10% annual overpayment limit, but that doesn't stop you offsetting the whole lot if you wish, which is something I've done in the past.
Not without risk of course, but would sticking all the overpayments into an ISA wrapped tracker fund be a better bet? It certainly would have been for me over the years, but I was/still am very risk averse if it's cash I would rather not lose.
ChocyLint1 said:
Hey Everyone,
My mortgage is coming to the end of the lock-in period (or whatver the term). My situation is much better than it was back then. This is the only debt I have.
House value is ~ £125,000
Remaining mortgage value £54,000
Term remaining is (as it stands) 16 years, 7 months.
Off hand I have no idea on interest rate, but nothing horrific.
Monthly payments ~ £430
This time gone, I just want it gone as soon as possble without being silly about it. Ideally i'd like in gone in about 7 years max.
The main things I want to ask:
"Is there a producrt or range of products that allow me to offset my cash at the bank (Approx £7,000) against the mortgage whilst also allowing massive overpayments."
To give some idea, at the moment I am often seeing £1500 monthly surplus of cash that could otherwise go to the mortgage but the penalties for overpayment disuade me from doing this. Not gaurenteed to be every month but frequently whilst not having to commit to those huge chunky payments of £1800 per month, ie I want the flexability.
Put your £7k somewhere else.............shorten your term...........choose a rate that allows 20% overpayments or one with unlimited overpayments........My mortgage is coming to the end of the lock-in period (or whatver the term). My situation is much better than it was back then. This is the only debt I have.
House value is ~ £125,000
Remaining mortgage value £54,000
Term remaining is (as it stands) 16 years, 7 months.
Off hand I have no idea on interest rate, but nothing horrific.
Monthly payments ~ £430
This time gone, I just want it gone as soon as possble without being silly about it. Ideally i'd like in gone in about 7 years max.
The main things I want to ask:
"Is there a producrt or range of products that allow me to offset my cash at the bank (Approx £7,000) against the mortgage whilst also allowing massive overpayments."
To give some idea, at the moment I am often seeing £1500 monthly surplus of cash that could otherwise go to the mortgage but the penalties for overpayment disuade me from doing this. Not gaurenteed to be every month but frequently whilst not having to commit to those huge chunky payments of £1800 per month, ie I want the flexability.
Edited by ChocyLint1 on Tuesday 29th December 21:22
I'm in a similar situation to you. What I would suggest is getting an offset mortgage from someone like the Yorkshire building society. Rather than worrying about making overpayments what I think you should aim to do is have the same amount sat in the savings account that is linked to the mortgage as you owe.
The reason I say this is that effectively by offsetting it it is like you have paid it off as you're no longer paying interest on that part of the debt. The advantage you then have is that you have tens of thousands of pounds available to you should you desperately need it. If on the other hand you overpay you lose that flexibility.
Now others may say that with interest rates being so low you'd be even better off investing in some sort of low cost tracker fund. But I can totally see the attraction of paying the mortgage off sooner.
Im actually only £4k away from having the mortgage fully offset. So I've started paying savings into an ISA instead as of course the debt is constantly being whittled away by the monthly payments.
The reason I say this is that effectively by offsetting it it is like you have paid it off as you're no longer paying interest on that part of the debt. The advantage you then have is that you have tens of thousands of pounds available to you should you desperately need it. If on the other hand you overpay you lose that flexibility.
Now others may say that with interest rates being so low you'd be even better off investing in some sort of low cost tracker fund. But I can totally see the attraction of paying the mortgage off sooner.
Im actually only £4k away from having the mortgage fully offset. So I've started paying savings into an ISA instead as of course the debt is constantly being whittled away by the monthly payments.
Hi,
When I looked at online calculators showing the savings with offset mortgages, the results were not as astounding as I was hoping for. I would therefore recommend you have a look at what the 7k will do for you and of course you could also see how the additional 1.5 / month will help out.
I agree with what Sarnie says about reducing the term. I did that with my first mortgage. I figured how much I could overpay a month and added that to the current payment amount. And changed the term to suit. So assuming you are happy to overpay 50% of the £1500 you generally have in surplus each month, add that to you current amount of £430 giving a total monthly mortgage of £1180. Then find the correct rate/deal for you and shorten the term such that the monthly payments are close to £1180.
This will help you pay off the mortgage quicker and reduce the amount you pay the bank in interest. And you can always over pay if you like.
Hope this helps.
FV
PS - how many years do you currently have on the mortgage? Sorry, forgot you had already said in the original post
When I looked at online calculators showing the savings with offset mortgages, the results were not as astounding as I was hoping for. I would therefore recommend you have a look at what the 7k will do for you and of course you could also see how the additional 1.5 / month will help out.
I agree with what Sarnie says about reducing the term. I did that with my first mortgage. I figured how much I could overpay a month and added that to the current payment amount. And changed the term to suit. So assuming you are happy to overpay 50% of the £1500 you generally have in surplus each month, add that to you current amount of £430 giving a total monthly mortgage of £1180. Then find the correct rate/deal for you and shorten the term such that the monthly payments are close to £1180.
This will help you pay off the mortgage quicker and reduce the amount you pay the bank in interest. And you can always over pay if you like.
Hope this helps.
FV
PS - how many years do you currently have on the mortgage? Sorry, forgot you had already said in the original post
Edited by fatvik on Tuesday 29th December 22:32
fatvik said:
Hi,
When I looked at online calculators showing the savings with offset mortgages, the results were not as astounding as I was hoping for. I would therefore recommend you have a look at what the 7k will do for you and of course you could also see how the additional 1.5 / month will help out.
I agree with what Sarnie says about reducing the term. I did that with my first mortgage. I figured how much I could overpay a month and added that to the current payment amount. And changed the term to suit. So assuming you are happy to overpay 50% of the £1500 you generally have in surplus each month, add that to you current amount of £430 giving a total monthly mortgage of £1180. Then find the correct rate/deal for you and shorten the term such that the monthly payments are close to £1180.
This will help you pay off the mortgage quicker and reduce the amount you pay the bank in interest. And you can always over pay if you like.
Hope this helps.
FV
PS - how many years do you currently have on the mortgage? Sorry, forgot you had already said in the original post
The savings aren't that great because interest rates are so low. Every pound you overpay will only save you the same amount as every pound that you have offset. Once you're not paying interest on the outstanding amount via offset you don't need to worry about interest rates in the same way you wouldn't if you'd paid the mortgage off. When I looked at online calculators showing the savings with offset mortgages, the results were not as astounding as I was hoping for. I would therefore recommend you have a look at what the 7k will do for you and of course you could also see how the additional 1.5 / month will help out.
I agree with what Sarnie says about reducing the term. I did that with my first mortgage. I figured how much I could overpay a month and added that to the current payment amount. And changed the term to suit. So assuming you are happy to overpay 50% of the £1500 you generally have in surplus each month, add that to you current amount of £430 giving a total monthly mortgage of £1180. Then find the correct rate/deal for you and shorten the term such that the monthly payments are close to £1180.
This will help you pay off the mortgage quicker and reduce the amount you pay the bank in interest. And you can always over pay if you like.
Hope this helps.
FV
PS - how many years do you currently have on the mortgage? Sorry, forgot you had already said in the original post
Edited by fatvik on Tuesday 29th December 22:32
fatvik said:
Hi,
When I looked at online calculators showing the savings with offset mortgages, the results were not as astounding as I was hoping for. I would therefore recommend you have a look at what the 7k will do for you and of course you could also see how the additional 1.5 / month will help out.
I agree with what Sarnie says about reducing the term. I did that with my first mortgage. I figured how much I could overpay a month and added that to the current payment amount. And changed the term to suit. So assuming you are happy to overpay 50% of the £1500 you generally have in surplus each month, add that to you current amount of £430 giving a total monthly mortgage of £1180. Then find the correct rate/deal for you and shorten the term such that the monthly payments are close to £1180.
This will help you pay off the mortgage quicker and reduce the amount you pay the bank in interest. And you can always over pay if you like.
Hope this helps.
FV
PS - how many years do you currently have on the mortgage? Sorry, forgot you had already said in the original post
What people need to realise is that interest rates are so low, close to 1% in some cases, so not a lot of interest is being charged at all.....so Offsetting £7k of interest at c1% isn't saving a lot at all.......not withstanding the fact that Offset rates themselves usually carry a premium over standard products.When I looked at online calculators showing the savings with offset mortgages, the results were not as astounding as I was hoping for. I would therefore recommend you have a look at what the 7k will do for you and of course you could also see how the additional 1.5 / month will help out.
I agree with what Sarnie says about reducing the term. I did that with my first mortgage. I figured how much I could overpay a month and added that to the current payment amount. And changed the term to suit. So assuming you are happy to overpay 50% of the £1500 you generally have in surplus each month, add that to you current amount of £430 giving a total monthly mortgage of £1180. Then find the correct rate/deal for you and shorten the term such that the monthly payments are close to £1180.
This will help you pay off the mortgage quicker and reduce the amount you pay the bank in interest. And you can always over pay if you like.
Hope this helps.
FV
PS - how many years do you currently have on the mortgage? Sorry, forgot you had already said in the original post
Edited by fatvik on Tuesday 29th December 22:32
If you have significant funds (over 50% of your mortgage balance for example) then it may be worth considering if you have no need for the funds long term.
But £7k isn't worth offsetting in my opinion, just pay it off the balance or put it elsewhere if you still want access to it....
Sarnie said:
carreauchompeur said:
Just to check, when people talk about 10pc overpayment limit, it is 10pc of the outstanding capital, isn’t it?
With most lenders, yes...........If you can secure a decent low rate for another 3-4 years with the same repayment term, and then save £1000 a month over that time you'd not be far off being able to repay in full come next reassessment?
This gives massive flexibility as you have excess cash to cover any life/work blips during this time and another 3-4 years interest won't be much, and if you manage to pay if off over a decade early that'll save a lot. If you invested the £1,000 a month you 'might' even win a bit there too but that's not without some risk in the short time period you might be talking about.
If interest rates are/were higher then reducing the term and paying more would make sense but at the rate you can save and presumably the low rate you can get on the mortgage then I think this gives you most flexibility?
This gives massive flexibility as you have excess cash to cover any life/work blips during this time and another 3-4 years interest won't be much, and if you manage to pay if off over a decade early that'll save a lot. If you invested the £1,000 a month you 'might' even win a bit there too but that's not without some risk in the short time period you might be talking about.
If interest rates are/were higher then reducing the term and paying more would make sense but at the rate you can save and presumably the low rate you can get on the mortgage then I think this gives you most flexibility?
Thats a lot of monthly spare and whilst a considerable, not really a proportionate amount of savings.
I'd certainly be saving/investing the £1500pm. Even 6 months of that will double your savings.
Two to three years with standard payments I'd imagine you'd have enough to clear it.
Personally, I'd buy a sports car!
I'd certainly be saving/investing the £1500pm. Even 6 months of that will double your savings.
Two to three years with standard payments I'd imagine you'd have enough to clear it.
Personally, I'd buy a sports car!
I just renewed my mortgage deal as we ended the 2yr fixed period after buying the house.
Ended up taking a 5 year fixed rate which actually dropped my monthly payments slightly and kept it locked in with less than 1.5%.
However during the last 3 years I've been putting about 50% of the equivalent mortgage payment into a S&S ISA instead of into the mortgage. The way I see it is that the ISA only has to be doing better than 1.5% annually to be better off than paying the mortgage off quicker. It also allows me to be more flexible if I needed cash in a hurry (unemployment etc).
The S&S ISA is currently up 16.1% overall (±5.3% per year) since so as far as I'm concerned I will continue to do this until such time as I can either clear the entire mortgage or keep going with this strategy. Either way it gives me options.
I looked in to the offset mortgage (with Natwest who I bank with) and the interest rates were prohibitive and would have taken the monthly payments up too high.
Ended up taking a 5 year fixed rate which actually dropped my monthly payments slightly and kept it locked in with less than 1.5%.
However during the last 3 years I've been putting about 50% of the equivalent mortgage payment into a S&S ISA instead of into the mortgage. The way I see it is that the ISA only has to be doing better than 1.5% annually to be better off than paying the mortgage off quicker. It also allows me to be more flexible if I needed cash in a hurry (unemployment etc).
The S&S ISA is currently up 16.1% overall (±5.3% per year) since so as far as I'm concerned I will continue to do this until such time as I can either clear the entire mortgage or keep going with this strategy. Either way it gives me options.
I looked in to the offset mortgage (with Natwest who I bank with) and the interest rates were prohibitive and would have taken the monthly payments up too high.
Hey everyone!
So lots of good ideas. In order to answer some questions:
Pension is already @20% with an employer match of 15%
I have also maxed out my SAYE already.
Hence the reason to start looking at paying it down! I was reading the advice of maybe taking a less "Obsessive" route....
I was thinking that in order to have a decent stab at making a balanced approach I was going to investige half of the money into overpaying the mortgage and the other half into my newly minted H&L account. I am thinking right down the middle but I am more thinking that the house is a "fixed cost", ie i am paying £423 a month and whilst its value increases, it doesnt increase for me, if that makes sense.
As to bulking up the cash on hand, if I could get 15% on that 7K in 6 months, it would be great (New tax year and that).
Putting half in H&L would yeald (apparently) between £750,000 and £1,000,000 over 15 years, depending on stock selection.
The only issue I see is that I would be paying circa 35% on the profit
.
I guess the real answer is to go and see an IFA
And just to state... I am not a rich bloke, I just live in a cheaper area but with a decent wage and side job to boot.
So lots of good ideas. In order to answer some questions:
Pension is already @20% with an employer match of 15%
I have also maxed out my SAYE already.
Hence the reason to start looking at paying it down! I was reading the advice of maybe taking a less "Obsessive" route....
I was thinking that in order to have a decent stab at making a balanced approach I was going to investige half of the money into overpaying the mortgage and the other half into my newly minted H&L account. I am thinking right down the middle but I am more thinking that the house is a "fixed cost", ie i am paying £423 a month and whilst its value increases, it doesnt increase for me, if that makes sense.
As to bulking up the cash on hand, if I could get 15% on that 7K in 6 months, it would be great (New tax year and that).
Putting half in H&L would yeald (apparently) between £750,000 and £1,000,000 over 15 years, depending on stock selection.
The only issue I see is that I would be paying circa 35% on the profit
.I guess the real answer is to go and see an IFA
And just to state... I am not a rich bloke, I just live in a cheaper area but with a decent wage and side job to boot.
One potential risk with offset mortgages is the following & obvs it’s not been tested yet in reality.
The govt safety net is £85k per licenced U.K. bank.
If you have an offset with “savings” in the offset greater than £85k and bank goes pop do you lose anything above £85k whilst the remaining mortgage debt is held and owed.
The govt safety net is £85k per licenced U.K. bank.
If you have an offset with “savings” in the offset greater than £85k and bank goes pop do you lose anything above £85k whilst the remaining mortgage debt is held and owed.
ChocyLint1 said:
Hey everyone!
So lots of good ideas. In order to answer some questions:
Pension is already @20% with an employer match of 15%
I have also maxed out my SAYE already.
Hence the reason to start looking at paying it down! I was reading the advice of maybe taking a less "Obsessive" route....
I was thinking that in order to have a decent stab at making a balanced approach I was going to investige half of the money into overpaying the mortgage and the other half into my newly minted H&L account. I am thinking right down the middle but I am more thinking that the house is a "fixed cost", ie i am paying £423 a month and whilst its value increases, it doesnt increase for me, if that makes sense.
As to bulking up the cash on hand, if I could get 15% on that 7K in 6 months, it would be great (New tax year and that).
Putting half in H&L would yeald (apparently) between £750,000 and £1,000,000 over 15 years, depending on stock selection.
The only issue I see is that I would be paying circa 35% on the profit.
I guess the real answer is to go and see an IFA
And just to state... I am not a rich bloke, I just live in a cheaper area but with a decent wage and side job to boot.
Maybe you have already but can’t see any mention of an ISA. So lots of good ideas. In order to answer some questions:
Pension is already @20% with an employer match of 15%
I have also maxed out my SAYE already.
Hence the reason to start looking at paying it down! I was reading the advice of maybe taking a less "Obsessive" route....
I was thinking that in order to have a decent stab at making a balanced approach I was going to investige half of the money into overpaying the mortgage and the other half into my newly minted H&L account. I am thinking right down the middle but I am more thinking that the house is a "fixed cost", ie i am paying £423 a month and whilst its value increases, it doesnt increase for me, if that makes sense.
As to bulking up the cash on hand, if I could get 15% on that 7K in 6 months, it would be great (New tax year and that).
Putting half in H&L would yeald (apparently) between £750,000 and £1,000,000 over 15 years, depending on stock selection.
The only issue I see is that I would be paying circa 35% on the profit
.I guess the real answer is to go and see an IFA
And just to state... I am not a rich bloke, I just live in a cheaper area but with a decent wage and side job to boot.
Why would you not open a Stocks & Share ISA for your H & L savings, you can invest up to £20,000 a year with no tax to pay on any gains.
tighnamara said:
Maybe you have already but can’t see any mention of an ISA.
Why would you not open a Stocks & Share ISA for your H & L savings, you can invest up to £20,000 a year with no tax to pay on any gains.
Hey!Why would you not open a Stocks & Share ISA for your H & L savings, you can invest up to £20,000 a year with no tax to pay on any gains.
I do have a Stocks and Shares ISA, as in the new one I opened yesterday. However, unless I have it wrong (and please correct me if I have) ... I already fully utilise my dividend allowance from my ltd company side job. That and being a higher rate tax payer means that I have to pay 35% for the privilege? IE, all my tax free allowance is consumed.
Do I have that wrong ?
ChocyLint1 said:
Hey everyone!
So lots of good ideas. In order to answer some questions:
Pension is already @20% with an employer match of 15%
I have also maxed out my SAYE already.
Hence the reason to start looking at paying it down! I was reading the advice of maybe taking a less "Obsessive" route....
I was thinking that in order to have a decent stab at making a balanced approach I was going to investige half of the money into overpaying the mortgage and the other half into my newly minted H&L account. I am thinking right down the middle but I am more thinking that the house is a "fixed cost", ie i am paying £423 a month and whilst its value increases, it doesnt increase for me, if that makes sense.
As to bulking up the cash on hand, if I could get 15% on that 7K in 6 months, it would be great (New tax year and that).
Putting half in H&L would yeald (apparently) between £750,000 and £1,000,000 over 15 years, depending on stock selection.
The only issue I see is that I would be paying circa 35% on the profit.
I guess the real answer is to go and see an IFA
And just to state... I am not a rich bloke, I just live in a cheaper area but with a decent wage and side job to boot.
Another option is to buy in a pricer area with any depressed prices and take notable higher £ gains when they go up. Then downgrade to a smaller /house/area. So lots of good ideas. In order to answer some questions:
Pension is already @20% with an employer match of 15%
I have also maxed out my SAYE already.
Hence the reason to start looking at paying it down! I was reading the advice of maybe taking a less "Obsessive" route....
I was thinking that in order to have a decent stab at making a balanced approach I was going to investige half of the money into overpaying the mortgage and the other half into my newly minted H&L account. I am thinking right down the middle but I am more thinking that the house is a "fixed cost", ie i am paying £423 a month and whilst its value increases, it doesnt increase for me, if that makes sense.
As to bulking up the cash on hand, if I could get 15% on that 7K in 6 months, it would be great (New tax year and that).
Putting half in H&L would yeald (apparently) between £750,000 and £1,000,000 over 15 years, depending on stock selection.
The only issue I see is that I would be paying circa 35% on the profit
.I guess the real answer is to go and see an IFA
And just to state... I am not a rich bloke, I just live in a cheaper area but with a decent wage and side job to boot.
There is no mention of buying platinum Rolex/Omega etc. There is decent money to be made in short run watches.
Why not invest more of this £ into the side business you have
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