Mortgage and windfall - thoughts?
Discussion
Bit of a quandary here…
We’re about to (hopefully) move into a long-term house soon, having been through the mill trying to find the right place.
We’ll likely be completing and starting the fairly hefty mortgage in Dec 24 / Jan 25. However, I’m due to receive a significant sum (£300K +) through the sale of shares at work some time in Feb / March 2025 too. The final amount isn’t yet known or absolutely guaranteed, just extremely likely.
I’d like to use most of that lump to clear the mortgage. But if I’m only 2 or 3 months into a 2 year fixed term, that would either mean a. Keeping a very high monthly and paying a massive chunk of interest until the 2 year product ends (circa £50K of interest, no less) or b. Paying a large exit fee (£14K - £15K) to get out of the product. I’d obviously rather not do either!
Anyone got any viable solutions? Bridging for a couple of months / more borrowing not really an option, and when I receive said lump I really don’t want to invest it in anything even moderately risky or that’s likely to lose over a period of time.
Has anyone heard of lenders that let you switch mid-product, or overpay a large amount / restructure providing you stick with them once done etc? Or is an offset savings account with the same lender likely to negate such interest issues?
Otherwise it looks at the moment like swallowing the ERC and switching products might be the only option, which would be bloody annoying for the sake of 2-3 months of payments…
ETA - the £300K net is the likely worst case scenario, even if CGT is increased to 40% from October, but that’s another rant!
We’re about to (hopefully) move into a long-term house soon, having been through the mill trying to find the right place.
We’ll likely be completing and starting the fairly hefty mortgage in Dec 24 / Jan 25. However, I’m due to receive a significant sum (£300K +) through the sale of shares at work some time in Feb / March 2025 too. The final amount isn’t yet known or absolutely guaranteed, just extremely likely.
I’d like to use most of that lump to clear the mortgage. But if I’m only 2 or 3 months into a 2 year fixed term, that would either mean a. Keeping a very high monthly and paying a massive chunk of interest until the 2 year product ends (circa £50K of interest, no less) or b. Paying a large exit fee (£14K - £15K) to get out of the product. I’d obviously rather not do either!
Anyone got any viable solutions? Bridging for a couple of months / more borrowing not really an option, and when I receive said lump I really don’t want to invest it in anything even moderately risky or that’s likely to lose over a period of time.
Has anyone heard of lenders that let you switch mid-product, or overpay a large amount / restructure providing you stick with them once done etc? Or is an offset savings account with the same lender likely to negate such interest issues?
Otherwise it looks at the moment like swallowing the ERC and switching products might be the only option, which would be bloody annoying for the sake of 2-3 months of payments…
ETA - the £300K net is the likely worst case scenario, even if CGT is increased to 40% from October, but that’s another rant!
Edited by ShortShift811 on Monday 16th September 17:41
Edited by ShortShift811 on Monday 16th September 17:42
I am sure someone will have a better idea of what is possible but my first thought would be to explore the possibility of having a variable rate mortgage now and then switching to a fixed rate at a later stage once the lump sum has been received.
I am not up to speed with current mortgage policy so my idea may not be possible but it is just a thought
I am not up to speed with current mortgage policy so my idea may not be possible but it is just a thought
A few experts in here so you'll get some excellent info shortly. My gut says you'll have no problem specifying a deal that allows large overpayments which will solve your problem. They were certainly available a few years ago. I used one myself in a similar scenario. Good luck with the move.
When we bought our "forever house " 20 years ago we took out a silly Interest only mortgage but split it into effectively 2 with one being fixed / discounted rate and the other variable.
Part of the deal was we could pay off various lump sums along the way in different percentage maximums with no additional redemption charges etc.
I knew I would be receiving decent annual bonus's for at least the next 5 years and part of the application form ( I actually wrote a letter - I presume this isn't even a thing any more ?!) suggesting I would use 50% of the nett bonus to write the Lender a cheque each time.
I went to the BS via a Mortgage Broker so this is the part I would still recommend.
Part of the deal was we could pay off various lump sums along the way in different percentage maximums with no additional redemption charges etc.
I knew I would be receiving decent annual bonus's for at least the next 5 years and part of the application form ( I actually wrote a letter - I presume this isn't even a thing any more ?!) suggesting I would use 50% of the nett bonus to write the Lender a cheque each time.
I went to the BS via a Mortgage Broker so this is the part I would still recommend.
ShortShift811 said:
Bit of a quandary here…
We’re about to (hopefully) move into a long-term house soon, having been through the mill trying to find the right place.
We’ll likely be completing and starting the fairly hefty mortgage in Dec 24 / Jan 25. However, I’m due to receive a significant sum (£300K +) through the sale of shares at work some time in Feb / March 2025 too. The final amount isn’t yet known or absolutely guaranteed, just extremely likely.
I’d like to use most of that lump to clear the mortgage. But if I’m only 2 or 3 months into a 2 year fixed term, that would either mean a. Keeping a very high monthly and paying a massive chunk of interest until the 2 year product ends (circa £50K of interest, no less) or b. Paying a large exit fee (£14K - £15K) to get out of the product. I’d obviously rather not do either!
Anyone got any viable solutions? Bridging for a couple of months / more borrowing not really an option, and when I receive said lump I really don’t want to invest it in anything even moderately risky or that’s likely to lose over a period of time.
Has anyone heard of lenders that let you switch mid-product, or overpay a large amount / restructure providing you stick with them once done etc? Or is an offset savings account with the same lender likely to negate such interest issues?
Otherwise it looks at the moment like swallowing the ERC and switching products might be the only option, which would be bloody annoying for the sake of 2-3 months of payments…
ETA - the £300K net is the likely worst case scenario, even if CGT is increased to 40% from October, but that’s another rant!
Options;We’re about to (hopefully) move into a long-term house soon, having been through the mill trying to find the right place.
We’ll likely be completing and starting the fairly hefty mortgage in Dec 24 / Jan 25. However, I’m due to receive a significant sum (£300K +) through the sale of shares at work some time in Feb / March 2025 too. The final amount isn’t yet known or absolutely guaranteed, just extremely likely.
I’d like to use most of that lump to clear the mortgage. But if I’m only 2 or 3 months into a 2 year fixed term, that would either mean a. Keeping a very high monthly and paying a massive chunk of interest until the 2 year product ends (circa £50K of interest, no less) or b. Paying a large exit fee (£14K - £15K) to get out of the product. I’d obviously rather not do either!
Anyone got any viable solutions? Bridging for a couple of months / more borrowing not really an option, and when I receive said lump I really don’t want to invest it in anything even moderately risky or that’s likely to lose over a period of time.
Has anyone heard of lenders that let you switch mid-product, or overpay a large amount / restructure providing you stick with them once done etc? Or is an offset savings account with the same lender likely to negate such interest issues?
Otherwise it looks at the moment like swallowing the ERC and switching products might be the only option, which would be bloody annoying for the sake of 2-3 months of payments…
ETA - the £300K net is the likely worst case scenario, even if CGT is increased to 40% from October, but that’s another rant!
Edited by ShortShift811 on Monday 16th September 17:41
Edited by ShortShift811 on Monday 16th September 17:42
Change your mortgage to an SVR rate for a couple of months, pay mortgage down, transfer to a new fixed rate.
Change the product on your mortgage to a tracker rate with no ERC's, pay mortgage down and then transfer to a fixed rate.
Change to an offset product and offset your funds.
No need for you to pay the ERC...........
Take a tracker with no lock in on the amount you want to repay less. The fixed part will have a 10% overpayment facility (depending on lender) and you can therefore tailor it to allow the total overpayment. Only downside is likely two product fees if you want the lowest of both rates.
I’m a broker and that’s how we arrange it for expected lump sums. Or use an offset.
I’m a broker and that’s how we arrange it for expected lump sums. Or use an offset.
Cheers all - especially those with professional experience, much appreciated. I like Essayer’s advice best though!
Does an offset product work hard enough to completely negate the interest position? If so, can I take one out in advance to move in December before getting the cash next Feb / March?
Does an offset product work hard enough to completely negate the interest position? If so, can I take one out in advance to move in December before getting the cash next Feb / March?
ShortShift811 said:
Cheers all - especially those with professional experience, much appreciated. I like Essayer’s advice best though!
Does an offset product work hard enough to completely negate the interest position? If so, can I take one out in advance to move in December before getting the cash next Feb / March?
It depends on how much cash you have to offset and what your mortgage balance is..........it also depends on how long you are happy to keep the funds in the Offset account............if you start reducing the amount of cash in the Offset account, the less benefit you'll be getting naturally....... Yes, you have time to secure an Offset product for a December move Does an offset product work hard enough to completely negate the interest position? If so, can I take one out in advance to move in December before getting the cash next Feb / March?
Just wanted to echo the offset solution. Anyone who has the opportunity to have an offset mortgage would be crazy not to do this. You can effectively pay off your mortgage, but retain an option to borrow that money back (i.e withdraw it) at a rate that will be better than any loan, HP or any other form of finance, for whatever period you need it for - perhaps to bridge something else or own a GT3 for a few months.
Why anyone pays off a mortgage a releases the opportunity to be in this position I'll never know.
My bank have written to me on several occasions over the last few years and offered me hard cash to just close the offset I have.
Why anyone pays off a mortgage a releases the opportunity to be in this position I'll never know.
My bank have written to me on several occasions over the last few years and offered me hard cash to just close the offset I have.
We were in a similar situation earlier this year, although our current deal was coming to a end , but some funds that we were expecting would be a few months later.
we took a 2 yr tracker deal with no early repayment clause and then cleared the mortgage a few months later, very simple and cost effective.
we took a 2 yr tracker deal with no early repayment clause and then cleared the mortgage a few months later, very simple and cost effective.
cashmax said:
Just wanted to echo the offset solution. Anyone who has the opportunity to have an offset mortgage would be crazy not to do this. You can effectively pay off your mortgage, but retain an option to borrow that money back (i.e withdraw it) at a rate that will be better than any loan, HP or any other form of finance, for whatever period you need it for - perhaps to bridge something else or own a GT3 for a few months.
Why anyone pays off a mortgage a releases the opportunity to be in this position I'll never know.
My bank have written to me on several occasions over the last few years and offered me hard cash to just close the offset I have.
This, provided you've then got the discipline to not just dip into it willy nilly.Why anyone pays off a mortgage a releases the opportunity to be in this position I'll never know.
My bank have written to me on several occasions over the last few years and offered me hard cash to just close the offset I have.
NowWatchThisDrive said:
cashmax said:
Just wanted to echo the offset solution. Anyone who has the opportunity to have an offset mortgage would be crazy not to do this. You can effectively pay off your mortgage, but retain an option to borrow that money back (i.e withdraw it) at a rate that will be better than any loan, HP or any other form of finance, for whatever period you need it for - perhaps to bridge something else or own a GT3 for a few months.
Why anyone pays off a mortgage a releases the opportunity to be in this position I'll never know.
My bank have written to me on several occasions over the last few years and offered me hard cash to just close the offset I have.
This, provided you've then got the discipline to not just dip into it willy nilly.Why anyone pays off a mortgage a releases the opportunity to be in this position I'll never know.
My bank have written to me on several occasions over the last few years and offered me hard cash to just close the offset I have.
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