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Original poster

Paying off last 20k of Mortgage without locking into 2 year mortgage

36 replies

SavvyAdviceNeeded · 18/08/2017 16:21

Name changed due to the sensitive nature of this topic.

My husband and I live in a mortgaged house, and have worked diligently to pay down the mortgage. Mid next year we will have 20k outstanding to pay - however, this will all be my debt as my husband contributed more to the deposit. We earn similar salaries so this seems fair.

Usually I could pay this down in one year - I wanted to just extend from 2018 to 2019. But our provider will not extend our mortgage on the current term for only one year (they'll make it two years or up the interest rate), and my husband thinks that refinancing with another provider will be too much effort, and doesn't want me to pay the establishment costs for a new mortgage (about 700 pounds). The interest rates quoted are decent.

He instead thinks I should borrow the money from his father, which wouldn't involve any interest or arrangement costs. I really don't like the sound of borrowing from family - he is a nice person but I don't want to feel indebted to someone or have to accept 'charity' when I earn a perfectly good salary.

What do people do when their mortgage gets down to a small amount? Surely it is normal and acceptable to take out a new mortgage rather than asking for a leg up from a parent?

Is there another way to avoid mortgage arrangement fees? Is it possible to negotiate these?

Thank you and sorry if I should understand how this all works.

OP posts:
horridhenrysdoggy · 18/08/2017 16:23

I agree with you - owing money to family sounds too risky.

I guess you could perhaps look at a bank loan? Like you would for a car/ home improvements?

SoPassRemarkable · 18/08/2017 16:24

Ring up Town and Country mortgages....I've never paid an arrange,ent fee in my life and change every five years. I wouldn't borrow money, but that's me. Don't likeminded borrowing.

Achoopichu · 18/08/2017 16:27

Why don't you just make it easy on yourself and pay over 2 years Confused. Interest rates are low enough?

thatdearoctopus · 18/08/2017 16:32

We're going to be in a similar position in a couple of years, but with only 6 months outstanding. We'll use savings to pay it off in one go. We bore this in mind the last couple of times we re-mortgaged (again, like remarkable, we've never paid and arrangement fee in 25 years) and organised the various terms to eventually end with a manageable amount at the end, iyswim (so with, say 7 years to go, we went for a 2 year, then 3 year then 2 year for example). Too late for you to do that, but I wouldn't discount the loan from fil, if I were you. You can always pay him the interest he would have earned on the amount if invested (haha!) if it makes you feel less indebted.

BackforGood · 18/08/2017 17:18

I'd sit down and work out the sums.... how much I'd pay (in total) over the 2 years, or over the one year, or on the low deal for one year and higher for next months, and then make an informed choice.

It sounds odd to me that you separate out which of you pays more on the mortgage however. Once married, all our money was 'our' money.. Can your dh not pay the difference out of his salary for the 6 months or whatever if it is going to save you, as a couple quite a bit of money ? Interest rates on savings are very low.

xyzandabc · 18/08/2017 17:23

What happens if you do nothing? Will your provider default you to their standard variable rate? If it's only going to be for a year and for such a small amount, even if rates rise, the amount extra you'd pay would be tiny compared to any arrangement fees.

StormTreader · 18/08/2017 17:24

"and doesn't want me to pay the establishment costs for a new mortgage (about 700 pounds)."

Is this the mortgage fee? There are a lot of mortgages with no fee for a higher interest rate, and considering youre at the end of paying it, an extra 1% interest rate really isnt going to impact you that much. Get one with no fee if you can, take 2 years to pay it off so you dont get early repayment fees, and use the cash you would have put into the mortgage to get some fabulous shoes.

ihatethecold · 18/08/2017 17:25

Why not just stay on the mortgage you are on?

CotswoldStrife · 18/08/2017 17:28

I'd just let the mortgage move on to the SVR (standard variable rate) for the final period. Would it cost more than £700 in interest?

pullingmyhairout1 · 18/08/2017 17:32

There are many fee free remortgages. Speak to a few free broker. Threshold or L&C are very good.

kath6144 · 18/08/2017 19:09

It sounds odd to me that you separate out which of you pays more on the mortgage however.

This, exactly. Was your DH more keen than you that you should pay more on mortgage. It does sound odd when you are married?

My DH paid for most of our house (he had a lot of equity in his bachelor house) but it nevertheless was a joint house, and all our money has been joint since the day we married. Including lump sums received as my inheritance, from some endowments I had, etc.

Why dont you concentrate on paying it off with both salaries, overpay as much as possible and maybe then not have to consider a re-mortgage? I am guessing you are not just married if you are paying off the joint mortgage?

Original poster
SavvyAdviceNeeded · 18/08/2017 19:37

Thanks to everyone who has replied with advice.

To those who questioned why I don't just pay it off over two years - it's because we want to pay it off over one, and be mortgage free as soon as possible.

I think that I probably will roll onto the SVR- husband seems to think it's a rip off but I don't think it's so bad.

It's also good to know that we can find providers without an arrangement fee.

For those who ask why I am left with the mortgage- it's because my husband contributed most of the equity from his previous house and we agreed it was fair that I'd pay more of the mortgage to compensate. I'm aware that on this forum, people think that all money should be shared. But I do earn enough to cover this, I just don't want to resort to borrowing from family to do it. I could borrow from my husband (who has savings) but we like to have a safety net in case of redundancy or illness.

OP posts:
thatdearoctopus · 18/08/2017 19:54

He's your husband. You're married and therefore family. Why on earth do you need to "compensate" him? Hmm And why are they "his" savings?"

One of the first things I noticed about my dh when we got together 23 years ago was his generosity, possibly because my previous partner had been mean as fuck. Dh very quickly gave me a key to his flat to come and go if I liked, and as soon as we became engaged, paid off my credit card bill. We've always pooled everything, regardless of who has earned more at any one time or worked full/part-time/been SAHP. His parents' inheritance went into an account in my name (for tax purposes) and he consulted me on how we should spend/save it. I will do the same in due course.
It's worked for us for over twenty years. I hate this his/mine business.

Original poster
SavvyAdviceNeeded · 18/08/2017 20:05

Thank you but because something works for you, doesn't mean it has to be the same for me. I can see your point but our day to day financial setup works fine for us (apart from him wanting me to borrow from family).

OP posts:
thatdearoctopus · 18/08/2017 20:15

Well it only works for you if you discount the fact that it's going to cost you, as a family, more financially than it otherwise would.

llhj · 18/08/2017 22:55

What's the huge rush to pay off mortgage? Interest rates aren't going to rocket in the next 24 months. If it's you paying it off, do whatever suits you. It's your debt not his. Tell him to poke borrowing off his dad, that's a terrible idea and totally unnecessary.

lougle · 18/08/2017 23:04

What's stopping you both from paying into the mortgage for the year, then you paying your DH back over the following year to repay him?

AJPTaylor · 18/08/2017 23:11

Find out what the SVR is. As the amount owed is so low it will hardly be worth the effort of transferring. Many lenders have a minimum amount lent of 30k. I think our last 6 months it went up to 3.79 or similar it was less than a tenner a month!

wheredoesallthetimego · 18/08/2017 23:37

Go onto a 2y fix with an offset, you'll only be able to overpay 10% but put the rest in the offset then you'll pay no interest and move it at the end of the 2y

pitterpatterrain · 18/08/2017 23:41

YY - lougle good point - as presumably you are both currently paying

calmanban · 19/08/2017 06:26

Eh? You could 'borrow' from your husband? Why then is he suggesting borrowing from his father. This sounds very odd.

Daisymay2 · 19/08/2017 06:45

When we got down to £20k we couldn't remortgage to a fixed rate as the minimum loan was £25k,so we went onto SVR and overpaid each month. For such a small amount the overpayment made a huge difference. You will probably find that the fees for a fix are more that the interest saved on a SVR..

coriliavijvaad · 19/08/2017 07:27

I would just stick with the SVR. You will only pay about £300 more on SVR than you would if you got a deal if you pay off the £20k over 1 year. I am not sure that the grief and hassle of trying to rearrange is worth it to save that.

kath6144 · 19/08/2017 12:11

Op - you mention your DH having savings, do you also have some? Given that you earn similar, I would guess you would - nothing wrong with having separate finances, but as you earn similar, you should both have a similar amount saved unless you prefer to spend all yours? Could you thus use your savings for mortgage?

Octopus your DH sounds like mine. Both houses on market before we married, his sold and completed a month before wedding. He used all his equity to clear my mortgage at that point, didn't ask to go on deeds as we were selling it too. Obvs when we bought together the following year, that equity was joint, but in those weeks before wedding I could have cancelled wedding and kept money if I was that way inclined.

Only in hindsight have I realised how generous and trusting an action it was. Not once in subsequent 21 yrs has he made reference to him having more money than me when we married.

ihatethecold · 19/08/2017 14:03

I agree kath and octopus,
When I met my dh 20 years ago I was renting and he had got on the property ladder 10 years previously.
We moved and used his equity to buy a bigger place because I had a child already and we wanted more children.
My name went on the new place deeds and the money from the sale of his place was viewed as equal.
There has never been any discussion about who pays what.

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