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AIBU?

To be terrified about mortgage

633 replies

melodypondisasuperhero · 27/09/2022 14:47

We finally managed to get our first mortgage last year and now this is happening. Our rate is 3.09% which runs out in August, currently the follow-on rate is 5% but I imagine this will go up several times before the end of the fix. We could manage 6%, probably just about 8%, but any higher than that and I really don’t know.

AIBU to be terrified? Or am I missing something?

OP posts:
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Am I being unreasonable?

1325 votes. Final results.

POLL
You are being unreasonable
13%
You are NOT being unreasonable
87%
AuntSalli · 07/10/2022 15:30

etulosba · 07/10/2022 15:11

It’s always worth it most definitely providing

It isn’t always worth it. If you can make more money with the spare money than the mortgage is costing you, it doesn’t make sense to do so.

I could have paid our mortgage off years ago but didn’t.

Is 70 quid a month likely to make a life changing difference in any other investment vehicle ?
I mean you could gamble it on the stock exchange but then you gonna be pretty upset if you lose the bloody lot and you could’ve paid your mortgage off with it would’ve thought

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etulosba · 07/10/2022 16:50

Is 70 quid a month likely to make a life changing difference in any other investment vehicle ?

It all adds up.

Life changing is an over used phrase on MN. My mortgage is paid off. It ran its full term.

My life didn’t change.

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Murdoch1949 · 08/10/2022 02:37

Really difficult times are incoming, first vehicle fuel, then energy costs now bank rates. We are buggered. Buyers have been encouraged to take out big mortgages, buy the biggest house they could afford (or not), now they are in the dooddah. I had a mortgage in 1988 when quadrupled in 3 years, I only survived because I’d changed jobs and my employer guaranteed additional mortgage payments, phew. House repossessions happened in every street, terrible time. It used to be a standard 3 x salary of first buyer, plus half of partner. Now it seems to be 4/5 times joint income. Unaffordable. All you can do is reduce expenses, good luck with that, and try to weather the storm, if you try to sell you’ll lose equity.

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BarbaraofSeville · 08/10/2022 07:57

etulosba · 07/10/2022 16:50

Is 70 quid a month likely to make a life changing difference in any other investment vehicle ?

It all adds up.

Life changing is an over used phrase on MN. My mortgage is paid off. It ran its full term.

My life didn’t change.

I agree. I remember when my parents paid off their mortgage, it was at about the same time I took out my first one.

There was some discussion about whether they would now have 'loads of money to spend on what they wanted to'. They laughed and said that seeing as it was about £70 pm they wouldn't be booking the world cruise just yet.

Up to now we've saved rather than overpay because the interest rate has been pretty much nothing, but we're now paying it down in conjunction with investing, but seeing as it's about 5% of our monthly income, paying it off will make very little difference to our lifestyle when we pay it off, I'm just enjoying beating the banks at their own game in the meantime.

A lot of MN can't see past their own situation of a very large mortgage on a very expensive house that, when the time comes, will have a substantial inheritance tax liability, despite only a minority of people being in such a situation.

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Gymgo · 08/10/2022 15:12

BarbaraofSeville · 08/10/2022 07:57

I agree. I remember when my parents paid off their mortgage, it was at about the same time I took out my first one.

There was some discussion about whether they would now have 'loads of money to spend on what they wanted to'. They laughed and said that seeing as it was about £70 pm they wouldn't be booking the world cruise just yet.

Up to now we've saved rather than overpay because the interest rate has been pretty much nothing, but we're now paying it down in conjunction with investing, but seeing as it's about 5% of our monthly income, paying it off will make very little difference to our lifestyle when we pay it off, I'm just enjoying beating the banks at their own game in the meantime.

A lot of MN can't see past their own situation of a very large mortgage on a very expensive house that, when the time comes, will have a substantial inheritance tax liability, despite only a minority of people being in such a situation.

Thats what I been doing, stocks down a bit so going to wait till current rates end and take at least 50k off it

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ahillGlo · 08/10/2022 15:19

I don't know what stocks you've bought but mine are down 30%. Luckily it's money i don't need so i'll wait as long as necessary but it's more of a mental relief to be mortgage free, people can invest in other venures knowing they will always have a roof, that's very liberating for the risk adverse.
Of course if you always know you'll have a roof with family you wouldn't be able to relate

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Gymgo · 08/10/2022 15:36

ahillGlo · 08/10/2022 15:19

I don't know what stocks you've bought but mine are down 30%. Luckily it's money i don't need so i'll wait as long as necessary but it's more of a mental relief to be mortgage free, people can invest in other venures knowing they will always have a roof, that's very liberating for the risk adverse.
Of course if you always know you'll have a roof with family you wouldn't be able to relate

I have invested in funds and my partner too , we are way up but at the moment the market is poor

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DeadHouseBounce · 09/10/2022 15:27

altmember · 06/10/2022 12:16

I'm not sure that's true. My mortgage has always quoted a fixed repayment amount for the entire duration. Obviously that changes and gets recalculated whenever anything changes (like lump sum overpayments and interest rate changes).

So not a repayment that reduces each month/yr. That's why in the early part of the mortgage your payments are predominantly covering the interest, and later in the mortgage that same monthly amount is reducing the balance more.

Obviously the interest is compound, so small rate increases make a huge difference over the lifetime of the mortgage. And the more you overpay, and the earlier you over pay it, the biggest the saving long term. It's a bit like pensions in reverse - the earlier you start and the more you pay in earlier, the bigger the advantage in the long term, due to the same compounding effect.

In regards to overpayment allowances, they're usually calculated annually, not on a monthly or daily basis. Typically, at the start of a 12 month period the amount is set for that year based on the mortgage balance at the start of it. You'd have to check the details or your mortgage to find out when that 12 month period runs from/to.

Mine was 30th September, so I managed to use up all of last years overpayment allowance just before the end of the year, and now it's reset for the next 12 months. In theory, I could pay off all my 10% allowance for this next year right now, or I could do it in equal monthly amounts, or I could wait until 29th September 2023 and do it all in one go then.

At the moment, it's possible to get savings rates that are outpaying mortgage interest (if you've got an existing fix at a good rate). E.g. my mortgage rate is 2.4% for another 15 months, but Barclays have just launched a savings account that's paying 5.1% interest. So for now, I'm better off (only by a £100 or so) putting the money into savings than overpaying the mortgage.

Is the Barclays account one where you need to do your main banking with them?

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