Mortgages what’s everyone’s plans

[Clockwatching54321]

Anyone got a deal ending next year?

Our 5 year fix runs out next summer and I think
we have 3 options:

1. pay the early repayment charge now and get another fix (not the best option at the moment)
2. get another mortgage deal but not execute until the last minute (6 months from now) and pay the early repayment charge then (hoping the deal doesn’t get pulled)
3. wait it out on the 2% fix and overpay as much as we can and see what happens next summer

Option 3.

I’ve costed it out for my circumstances and it will cost £6k to change now (Early Repayment Charge and increased payments for next year plus fee for new mortgage). Even excluding £1k for new mortgage (on the basis that I’ll have to pay that at some point anyway) that’s the same as paying an extra £420/month for 1 year. So unless rates drop by August 2023 I’m going to go SVR until August 2024 and use that amount to facilitate that and hope that over that time rates fall for another 5 year fix.

It’s all a gamble!

@Ikeameatballs it's good to hear of someone else who is tempted to go onto the SVR next summer.

Our mortgage is up in June and as things stand experts think that is when rates will peak. If that is still the thinking at the time I might wait too. I really don't want to pay a massive fee for a 'peak rate'.

I'm going to book a rate in January anyway so I have something to fall back on.

I've got some savings I'm going to put on my mortgage next year so I'll have £70k left when the fixed rate ends so I think I can afford to take a bit of a risk on whether rates might fall again.

@anewbook

www.moneysavingexpert.com/mortgages/fixed-mortgage-calculator/

We’re in the same position and going for option 3. And hoping for the best!

@princesssparklepants thanks for the link!

Does anyone know if you have to go through affordability checks etc if you stay with the same lender but come out of fixed deal early? We have an appointment with our banks mortgage advisors next week but not sure how it works?

I think it's only if you want to borrow more or go with a new lender. We've stayed with our lender and didn't have to do any new checks etc. did it all online actually.

@whereeverilaymycat we have always stayed with the same lender and switched online and never needed to do checks etc but because we are coming out of our fixed deal we can’t do it online so I wasn’t sure if the process was the same or not?

Hmmm not sure if it's early. We did ours early but within the timeframe you're allowed, so that was ok online etc. hopefully someone will come along that will know a bit more

Option 3 and over pay over pay overpay.

The 2k early repayment fee is a sizeable amount off anyone's mortgage. The more you get the debt down the less interest you pay overall.

We have always stayed with the same lender and managed to do it online.

We refixed a fixed and moved from a tracker to a fixed all online earlier this year.

We have 13 months on our current deal and going with option 3.

We have also started to overpay by £400 a month.

We are sitting tight. We have 3 products, 2 run out in May (1 BTL, 1 is residential). The third is residential and is Summer 2024.

The residential we can look at in November but we can’t afford to change lender for various reasons so it’s difficult. Our LTV for the total mortgage (£225k) is roughly 50% and the portion running out first is £150k (there’s a second fixed for £75k that runs out in 2024 as when we moved we ported our mortgage and borrowed more).

If we can fix at under 5% in Nov we probably will, if we can’t we’ll wait and see.

I’m not going to do anything with the BTL as worst case scenario I’ll sell it and pay off most of our residential mortgage instead. So we have a plan B but don’t want to evoke it if we can make the sums work to keep it.

Also we can’t overpay as we have nothing spare until DD gets her 30hrs funding at nursery.

You might want to consider a fixed term savings account rather than overpaying.

If your mortgage is at 2%, and you can get 4.5% on fixed savings, you're better off putting your £10k (or whatever) in a fixed term account and then throwing it at the mortgage when your fixed term is up.

Basically, think of overpaying your mortgages like having a savings account on which you get 2% - you can do better at the moment.

Just another option for you.

We were already on a crappy 3.56 deal as only one lender would bank on us as so close to affordability!
So we've just paid £9k (some of it through increasing mortgage) to remortgage at 3.48 for another 5 years.
Gives us the stability we need for the next 5 years with little DC.

@Live4weekend we have always done that too but we are leaving our current deal early (before the 6months prior) so am not sure how it works

I would do (3) also make your "overpayment" into savings rather than the mortgage itself while you have the 2% rate - it keeps these funds liquid and makes more money - then pay into the mortgage itself when you have to take a new product either as a lump sum to lower the LTV or to cover the extra payments (when you know what it will be).

My mortgage is 6.8% so I’ll be doing the same as I’ve always done, overpaying as much as possible.

Have a look at offset mortgages if you have some savings. You’ll get same rate on your savings too. Higher rates can work for you that way.

Well I read an article today that said interest rates have probably peaked but house prices are likely to drop by 10% over the next few months.
I was the clever person who took on a 10 year fixed at 4.6% in 2007.
As someone who has lived through a few recessions I'd be inclined to hang on.
Here's some interesting reading
en.wikipedia.org/wiki/List_of_recessions_in_the_United_Kingdom
Not sure if that link will work.
We are overdue a recession and it's a worldwide thing so not the fault of the current government and it's likely to be tough for the next year or two (possibly even longer if Labour win the next election) but then things will probably settle down again. They always do.

@CastleTower I was thinking of this option but can’t find a calculator that would take into account timings.

So if mortgage is 2% and savings rate is 5% and you save for 3 years with a view to paying a lump sum at the end of the fix it’s not a simple 3% gain as overpaying the mortgage amount and/or interest in years 1, 2 and 3 will have an effect on the amount of interest owed as you are paying early. There will be some savings on the accumulated interest over the 3 years.

I can’t work out if overpaying regularly before the end of the fix will have more benefit than the 3% gain from a savings account.

Does anyone know?

Not in the UK, but a main one and a smaller one come off 2.99% just over a month's time. I refixed the bigger one for 18 months at 5.49% (special rate where I live) and the smaller one for 12 months just before our reserve bank announced an increase.

Up until this change, we have been dumping as much as we could on our loans while the rates were low and making a decent dent in them. We have a car loan finishing in December 4 years early and the balance we will pay out in full.

2 smaller ones (for some reason I broke up the one main mortgage into smaller loans several years ago) will mature next year at different times and I hope to pay them out or down in a substantial way. Then we will concentrate on paying extra on the remaining big loan when it matures again.

the great shame out of all of this is DM isn't getting investment rates for her term deposits anything like what the new mortgage interest rates are, and our superannuation value keeps dropping, despite not being in high volitile investment strategies. I could have paid out one of the loans with what I had 12 months ago, not now.

I hadn’t thought of overpaying. At a rate of 1.79% until 2026, would we be really stupid not to overpay now? We’ll only have about 75k left to pay by 2026.