Re-mortgage now or wait?
Discussion
RoadToad84 said:
Abdul Abulbul Amir said:
Assuming you won't need the £200 for other purposes, I'd be paying off the mortgage each month.
I was under the impression that making capital repayments was "better" than chipping away at it. Is that not the case? It is better to pay off straight away. I.e. 200pm as the first month in you will no longer be paying interest on that 200, same with the next and the next. If you alternatively save up the 200 and pay it off in lump sums you are paying interest on that dent before you pay it off. Most mortgages are daily interest so the affect is immediate.
Sarnie said:
ARF8885 said:
That’s the pay rate.
Appreciate there is risk involved, but it reduces our monthly payments (by circa £200pm) and the difference between what we pay now Vs the new rate will be banked.
You must be on a high rate (SVR?) currently, for a 2.99% rate to be giving you a saving of £200pm?Appreciate there is risk involved, but it reduces our monthly payments (by circa £200pm) and the difference between what we pay now Vs the new rate will be banked.
Benefited from our improved LTV due to properly value increasing. So mixture of that and reduced rate contributing to monthly reduction.
Sarnie said:
DonkeyApple said:
That doesn't mean the 'product' shouldn't be put to bed though.
It's clearly been utilised mainly as a sales tool for fee generation but is detrimental to the weaker end of the consumer market.
For example, what positive purpose does it offer the customer today? Would any regulated advisor be using it?
It's not actually a product itself though, I don't see how you think an SVR has or could be used as a tool for fee generation or be detrimental to the weaker end of the market.......as I say, it wasn't to their detriment for the previous decade......It's clearly been utilised mainly as a sales tool for fee generation but is detrimental to the weaker end of the consumer market.
For example, what positive purpose does it offer the customer today? Would any regulated advisor be using it?
I never see any harm in questioning the validity of retail facing financial products. I'd rather as financial professionals we did a bit more of that which is why Id question the merit of this 'product' now we are away from zero rates and it does carry an excessive mark-up. I would want to question why, if it is not on the shelf to be sold directly, why it is on that shelf?
trashbat said:
Platform (who we're currently with) are supposedly launching a 3.71% 5 year fix on Monday. £1249 fee. I think I'll drop the now fairly crappy Barclays tracker we've got lined up and go with that. We've got to sort something by May.
It may be worthwhile holding off a couple more weeks, to see if any competition comes though to compete.Moneyfacts website used to be great for comparing mortgages, as they gave you a calculation of what you actually pay over the full term of the product. Being able to rank them by lowest overall cost, rather then the headline grabbing lowest % rates was particularly helpful.
Not sure if they still do it though.
Not sure if they still do it though.
Rob_125 said:
trashbat said:
Platform (who we're currently with) are supposedly launching a 3.71% 5 year fix on Monday. £1249 fee. I think I'll drop the now fairly crappy Barclays tracker we've got lined up and go with that. We've got to sort something by May.
It may be worthwhile holding off a couple more weeks, to see if any competition comes though to compete.If you have a large mortgage, the fee is irrelevant vs the years of increased payments for the deal without a fee. If you have a smaller mortgage, then a fee free deal might be better. Just look at the cost over the period of the fix / discount etc. and work out what is best for you.
CharlesElliott said:
If you have a large mortgage, the fee is irrelevant vs the years of increased payments for the deal without a fee. If you have a smaller mortgage, then a fee free deal might be better. Just look at the cost over the period of the fix / discount etc. and work out what is best for you.
Very true.The spinner of plates said:
Biggest fee I’ve seen.
Yeah, but many at or around that level. There are variants of the product with lower fees, slightly higher rates.Rob_125 said:
It may be worthwhile holding off a couple more weeks, to see if any competition comes though to compete.
Yep. All a guess isn't it. I don't know what the point of no return is with same lender product transfers though, I should look into it. With lender changes, like our prospective Barclays one, it's at least after doing the mortgage deed, which I've deliberately held off doing. I can still have my fee back if I pull out. The flipside is it probably takes longer to arrange something new with a different lender.Caddyshack said:
Chipping away is making capital repayments. If you pay 200 to the lender it comes straight off the capital and either your monthly payments drop or the payment stays the same and then creates a small overpayment.
It is better to pay off straight away. I.e. 200pm as the first month in you will no longer be paying interest on that 200, same with the next and the next. If you alternatively save up the 200 and pay it off in lump sums you are paying interest on that dent before you pay it off. Most mortgages are daily interest so the affect is immediate.
Thank you for this. Coventry have a paragraph that says something like "overpayments of 3 times the monthly payment will be treated as a capital repayment and taken from the principle amount" which is what caused my confusion. It is better to pay off straight away. I.e. 200pm as the first month in you will no longer be paying interest on that 200, same with the next and the next. If you alternatively save up the 200 and pay it off in lump sums you are paying interest on that dent before you pay it off. Most mortgages are daily interest so the affect is immediate.
I've been running figures through the drcalculator website and have seen impact that regular monthly payments would make.
As it is, I've decided to split the difference. Have rounded up my monthly from £507 to £600, allowing me to save the remainder for anything else that may crop up, with the intention of paying an additional annual chunk as circumstances allow.
Upping the monthly payment to £600 knocked 3 years off the term, whereas annual payments of £1800 would have taken 2 years off. A combination of both will see me mortgage free by 2032.
RoadToad84 said:
Caddyshack said:
Chipping away is making capital repayments. If you pay 200 to the lender it comes straight off the capital and either your monthly payments drop or the payment stays the same and then creates a small overpayment.
It is better to pay off straight away. I.e. 200pm as the first month in you will no longer be paying interest on that 200, same with the next and the next. If you alternatively save up the 200 and pay it off in lump sums you are paying interest on that dent before you pay it off. Most mortgages are daily interest so the affect is immediate.
Thank you for this. Coventry have a paragraph that says something like "overpayments of 3 times the monthly payment will be treated as a capital repayment and taken from the principle amount" which is what caused my confusion. It is better to pay off straight away. I.e. 200pm as the first month in you will no longer be paying interest on that 200, same with the next and the next. If you alternatively save up the 200 and pay it off in lump sums you are paying interest on that dent before you pay it off. Most mortgages are daily interest so the affect is immediate.
I've been running figures through the drcalculator website and have seen impact that regular monthly payments would make.
As it is, I've decided to split the difference. Have rounded up my monthly from £507 to £600, allowing me to save the remainder for anything else that may crop up, with the intention of paying an additional annual chunk as circumstances allow.
Upping the monthly payment to £600 knocked 3 years off the term, whereas annual payments of £1800 would have taken 2 years off. A combination of both will see me mortgage free by 2032.
Caddyshack said:
Overpayments are a great way to reduce the mortgage and they can become quite addictive, if you try and increase the overpayments each 6 months you can really build up without noticing it too much. We are down to our last 2.5 years and it is a nice feeling.
I'm paid weekly, and I'm a big fan of round numbers. The £507.30 payment really wasn't working for me at £126.825p / week (based on a 4 week month - the occasional 5 week payday month I treat as a bonus). £150 a week makes my spreadsheet look a lot nicer! Can I push to £200 a week? I'll see how things are in 6 months! Cheers
Caddyshack said:
Overpayments are a great way to reduce the mortgage and they can become quite addictive, if you try and increase the overpayments each 6 months you can really build up without noticing it too much. We are down to our last 2.5 years and it is a nice feeling.
Back when rates were higher it was pretty much free money at the start of a loan as £100 paid off now saved £100 in interest costs on a 20 year loan. I can't remember the numbers but have a vague memory that around 5% was the level at which overpayments achieved this?DonkeyApple said:
Back when rates were higher it was pretty much free money at the start of a loan as £100 paid off now saved £100 in interest costs on a 20 year loan. I can't remember the numbers but have a vague memory that around 5% was the level at which overpayments achieved this?
Back when interest rates were higher, inflation was significant. Even more so than now.When I got my first mortgage I was paying 80p a pint for beer, now it's 4 quid.
Paying off your mortgage early is nice, but over it gets easier anyway.
Also as you go through life hopefully your job improves so you earn more, so it's easier to pay stuff off later.
OTOH, money is more plentiful before having kids.
And one day you may find that your career has peaked. It's nice to have cut your mortgage down to size before then.
There are just so many ways it can be better to have a few thousand pounds in savings than a few thousand pounds off your mortgage.
That's the balance.
OutInTheShed said:
Back when interest rates were higher, inflation was significant. Even more so than now.
When I got my first mortgage I was paying 80p a pint for beer, now it's 4 quid.
Paying off your mortgage early is nice, but over it gets easier anyway.
Also as you go through life hopefully your job improves so you earn more, so it's easier to pay stuff off later.
OTOH, money is more plentiful before having kids.
And one day you may find that your career has peaked. It's nice to have cut your mortgage down to size before then.
There are just so many ways it can be better to have a few thousand pounds in savings than a few thousand pounds off your mortgage.
That's the balance.
It's that balance I'm trying to achieve now. I'm 39 with no kids, and no plans to move. I may be "wrong" but my priority is to pay off my mortgage and be debt free asap. I don't earn huge amounts, and realistically I never will, so the security of having my own home bought and paid for is important to me. When I got my first mortgage I was paying 80p a pint for beer, now it's 4 quid.
Paying off your mortgage early is nice, but over it gets easier anyway.
Also as you go through life hopefully your job improves so you earn more, so it's easier to pay stuff off later.
OTOH, money is more plentiful before having kids.
And one day you may find that your career has peaked. It's nice to have cut your mortgage down to size before then.
There are just so many ways it can be better to have a few thousand pounds in savings than a few thousand pounds off your mortgage.
That's the balance.
I also realise that life is for living, and it's a sad state of affairs if I scrimp and save my "youth" away to pay the house off, then find I'm unable to enjoy the rewards later. My V8 does a good job of persuading me to burn money for fun though!
RoadToad84 said:
Caddyshack said:
Overpayments are a great way to reduce the mortgage and they can become quite addictive, if you try and increase the overpayments each 6 months you can really build up without noticing it too much. We are down to our last 2.5 years and it is a nice feeling.
I'm paid weekly, and I'm a big fan of round numbers. The £507.30 payment really wasn't working for me at £126.825p / week (based on a 4 week month - the occasional 5 week payday month I treat as a bonus). £150 a week makes my spreadsheet look a lot nicer! Can I push to £200 a week? I'll see how things are in 6 months! Cheers
You have to plan to live too long, die to soon and become ill or disabled along the way (as our old Sales Director used to say at a big Financial Advisory firm)
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