AIBU to ask your opinion on my mortgage

[rachb2019]

Essentially I took out a mortgage on my first house in 2017 - the terms were the right decision at the time - but now that circumstances have changed I really regret my decision.

I paid £190k for my house in 2017 and borrowed £130k on a five year fix, over 25 years.

However, I am almost 100% certain by the time I need to re-negotiate the mortgage in 2022 I will have lost my job (we have been taken over and it is going through the competition laws as we speak).

I now have savings that could have covered most of the £130k back in 2017, which is why I regret borrowing so much money over such a long period of time.

My gut feeling is that I want to get the mortgage paid off as much as I can so I have freedom to leave the company I work for - but I guess I will be hammered with penalties for clearing the mortgage early.

If okay to ask, I was wondering what would you do?

[ThankyouwithacapitalR]

Get a mortgage redemption statement from your mortgage lender, they will tell you what the outstanding balance is and what penalties you'll need to pay,. In the grand scheme of things, paying penalties will be far less than the interest on the mortgage

[Justaboy]

Have a hunt around for a mortage broker and ask there and see if you have the best one around.

Then what makes you think you will be un employable when the existing employer goes bust or whatever?

[DoorstoManual]

We have more in the bank, than we owe on the small second mortgage we took out to do the bathroom and kitchen, we too are on a five year product. Once everything settles down we plan on paying it all off bar a nominal amount and reduce the mortgage to about £25 a month to see it to the end of its product life.

Could you do this ?

[GreenTulips]

I agree you need to look at the cost of borrowing V the interest on your savings to see if it makes financial sense to keep paying interest.

[Theonewiththecandles]

You are almost certainly paying more interest on the mortgage than you are earning keeping the money in savings, so honestly I would say pay off the mortgage if you can, after comparing the penalty to the interest you will be paying until the end of the fix.

A mortgage advisor WILL NOT tell you whether or not you should pay off your mortgage. This is a job for a financial advisor. Don't waste time trying to find a broker as they aren't going to be able to give you the information you need.

[MsMarvellous]

We got our mortgage statement for the year. We have 26 years left and £190k on mortgage. The redemption fee would be £3839. Way less than the interest we'd pay even in a single year. It's prob not as bad as you think

[Skintalways]

Offset mortgage??

[Floatyboat]

I'm not quite sure what the problem is.

You can just pay it off at the end of the term and overpay before then.

[wowfudge]

In addition to the other advice you've been given, hopefully you haven't got your savings all in one place as only £85k of it will be protected if the bank or building society goes bust.

[wowfudge]

I can't see why you think you have a problem as mortgages are a relatively low cost way of borrowing a large amount of money and having affordable repayments. None of us has a crystal ball, you made the right decision at the time? You may well not lose your job and will likely get another one if you do. With a large amount of savings you'll have a financial cushion if you have to take a lower paid job than the current one for a period of time. That said, overpaying on the mortgage is a good idea as it reduces the overall amount of interest you'll pay over the lifetime of the mortgage.

[time4anothername]

yabu for not telling us what the penality will be :-). You must have your t and cs and have it in writing what the penality is. It is often a sliding scale. You also will usually have a percentage you can overpay each year.
If you think you are going to be unemployed for some time for some reason don't put all your available cash into the mortgage, you'll have nothing to live on.

[Singlebutmarried]

If you’re into your last 2 years of the fox then the ERC will typically be between 1 and 3% of the loan value, depending on the agreement.

Why wax all all your savings now though if you’re likely to be out of a job? Surely you still need to eat and pay other bills?

Put the remainder 2 years of mortgage payments away.

Work out what the ERC is and the speak with a mortgage adviser as to whether it’s cheaper in the long run to pay it all back now or not.

You need proper financial advice really.

[TowelHoarder]

I don’t understand the problem, it sounds as though if you lose your job then you’ll have plenty of savings available to continue paying your mortgage until you find a new job. If you lay off the mortgage then lose your job you won’t have the savings to fall back on.

You’re in a very lucky position.

[Sailingblue]

The post is bizarre. Surely you can see you’re in a better financial position than many people? Either you’ve had a windfall/inheritance or have been able to save £130k Ish in 3 years. If you had an inheritance then that wouldn’t have had any bearing on what was sensible to borrow 3 years ago. If the latter then you have lots of disposable income and must be in a very high demand job. You’re unlikely to be paying much more than 2% so I don’t get why you are freaking out. You’d be looking at payments of around £500 a month- you’ve got more than enough savings to tide you over if you couldn’t find a job for a year.

[2DayW0rk2m0rrw]

You can take out insurance for critical illness & unemployment