Mortgage advice

[Rockandrollfangirl]

We have 2 products running. The second was for a contribution to an extension we had done.
We remortgaged the smaller one back in December and now the main one is due after 10 years.

My question is. Is it worth putting say about 5k onto the bigger product to bring it down. I can sell some shares in work and get just over 5k.
The new free they've given us is 7.99% variable but we'd probably want a fixed term the lowest is 5.37% with £1995 product fee or 5.46 with a £995 fee. There are also a couple of trackers offered. One is BOE +.53 for 12 months.

It's all so confusing to me. Doesn't the lower rate get cancelled out with the product fee.

Is tracker better? Our other product is 5.86% fixed until Dec 2017
I'd like to reduce our outgoings but haven't a clue how to work it all out.
Any advise would be most welcome

Bump

Take a step back for a moment. Consider the state of your overall financial security and longer term plans rather than just the current mortgage rates.

Do you have emergency cash savings set aside, with immediate access for such things as unexpected repairs?
Do have other, unsecured, debts?
Do you have at least 3 months salary set aside in case of job loss or long term illness?

These are factors I would consider a priority before paying off a lump sum on the mortgage. If you're concerned about reducing outgoings perhaps also investigate increasing the term of the mortgage temporarily.

Whether you are a married couple would also be a factor - are the shares part of joint marital assets? If you're in an unmarried partnership, I would hesitate to forego the sole-owned shares to make an unequal contribution to the mortgage if the house is jointly owned.

As to the type of mortgage and whether to fix and how long for - You might find this article useful in helping you decide:
https://moneytothemasses.com/owning-a-home/mortgages/should-you-fix-your-mortgage-now

I'm not a financial adviser though, so do your own research.

Thank you for your response.
We are married, and house is jointly owned the shares are technically mine through work. I have my own money/savings. We don’t pool our money due to having our own children with different outgoings/responsibilities for them
I have no debt DH has a credit card and overdraft. We put money into a joint account for bills but it’s never quite enough and I have to dip into savings every month. Only by £50-£100 but still.
I’m happy to sell some shares though and appreciate legally everything is joint but he’s terrible with money and I’m not so I’m quite happy not to pool.

We don’t need to use the share money for anything else so I either leave the stares as they if only putting 5k onto the mortgage won’t do much. Just looked at the statement again and we owe £53145.52 on that product

Here's my thoughts:

In the situation you describe with your DH's poor money management skills, separate finances and own children, I would keep hold of the shares for peace of mind. The £5K will have little effect on monthly payments I think (use an online mortgage calculator to check this).

Which type of mortgage will come down to how much you value the certainty of fixed payments over the time periods. The mortgage amount is a relatively small one (though I appreciate it might not seem that way). Therefore the fees for fixing will have a proportionally bigger impact.
Again use an online calculator to work out the difference between payments for the two fixed rates on offer and which might be better value over the offer term (divide the fees by the number of months of the fix, and add to the repayment calculations).

Thinking about the tracker rate. Work out your payments over the fixed terms on offer, with fees added as if you are paying them monthly. Then compare with the tracker. The difference between the fix-with-fees product and the tracker is the price you'll paying for securing certainty of monthly payments in the future.

The fact that you mention wanting to reduce your monthly outgoings suggests that reducing risk of tracker rate rises is an important consideration for you.

The shares don't bother me tbh we get allocated them regularly.

The reason I want to reduce the monthly payment is because I don't want to ask him to contribute more to the account because I know he can't afford too. DSS is expensive and I know he doesn't have extra cash.
We also owe £19500 on the second product so the 2 together add up. With the additional utilities this year too it makes sense to try and reduce the mortgage if we can as we don't have anything else to cut back on. I log we didn't pay council tax and gas abc electric I'd feel rich

I might be on the wrong track here but your updates hint at some financial red flags, beyond the scope of your initial question about fixed rate deals.
There seem to be some deeper misunderstandings (and potentially lost opportunities) about how to maintain a firm financial footing and building wealth and security for your family.

I don't want to detract from your initial post, so I would just say perhaps aim to invest some time into researching these things going forward.

The stock market is at a low point right now. Selling an asset at rock bottom prices for such a small mortgage makes no financial sense. 5k isn’t going to change your monthly payments by very much at all.

Your best bet is to review, honestly, as a couple where your money is going. You said DSS is expensive - why? Is it maintenance or because your DH is a disney dad who throws money at him? How much equity is in the house? If you’re regularly dipping into savings - are you maybe saving too much? Is there anywhere you can economise? Why is DH is in his overdraft and what is the credit card debt for - and would it help to get rid of both, consolidate it into a personal loan in his name (rates for 7k+ are lower or at least comparable to mortgages right now)?

Since when was £500,000 mortgage a 'small' amount?

^we'd probably want a fixed term the lowest is 5.37% with £1995 product fee or 5.46 with a £995 fee. There are also a couple of trackers offered. One is BOE +.53 for 12 months.
It's all so confusing to me. Doesn't the lower rate get cancelled out with the product fee^

As BOE is now 5.25% and possibly likely to increase a little before it drops back, I'd probably take the fixed.

Of the two you quote, gut instinct is the higher rate/lower fee is the best one, but it depends on the size of your mortgage. The monthly amount will be slightly more, but not much, and you have to pay the lower rate for a long time to make it worth paying a fee that is £1k higher, work out what the monthly payments are for each product.

If the difference is £10, your break even point is £1000/10 = 100 months, which is over 8 years, and more than the length of the fix. If the difference is £20 pm, that's 50 months, or just over 4 years, so if it's a 5 year fix it would be worth paying the higher fee to get the lower rate.

I read it as £53,145 (and 52p as there is a decimal point).

I thought the £53k was the one that paid for the extension but I've read it again and the two parts are around £53k main mortgage and about £19k towards the extension.

Which means that it's likely that the higher rate and lower product fee fixed rate will work out cheapest, unless there's something else from another lender with no fee at all? To me, product fees and 2 year fixed rates seem to be a bit of a con. They have you paying a hefty fee every couple of years, is that the only way?

DSS has expensive hobby which DH has been paying for many years. Also buys him expensive clothing Xmas time and has done for about 10 years. Credit card is mostly Xmas birthday over buying. Over draft is funding hobby and paying all his bills for him.
We only save £250 a month and that because I insist. We don't drink smoke or go out very often so not sure where we can cut back. I could contribute more to joint account but really don't thin li I should when he's chosen to fund DSS and DH likes labels on his clothes where as I don't give a shit. I think labels are pretentious bollocks and won't buy into it. I buy DD decent brands but not anymore fancy than say Nike etc. I'm just more careful.

Thank you this is very useful. I don't understand how to compare. My maths is embarrassing bad so I get confused.

@seekingasimplelife

well, there is that 😂

my eyesight isn't what it was, I must slow down with numbers! Plus with all the debate over it, 500,000 makes more sense than 50,009.

thanks for being nice about it 😊

£50,000 fat little fingers hit the 9 by mistake!

ok time for coffee!!

@Rockandrollfangirl

Nationwude have some great mortgage calculators (anyone can use them). I use their 'overpayments' one as it has lots of variables you can use. Often I just put £1 pm in the overpayments bit as the other part of it is easy for changing the amount borrowed, interest rate, length of mortgage etc

Great thank you

Honestly looking from the outside and regretting some of my money choices

Id put the £5k into my pension as a lump sum

Then Id stop putting the £100 from savings into the family pot every month and put that in either my pension, the government will reward you for doing this so if you put in £100 extra into your pension each money you'll only see £70 out of your pay packet approx. Or put the money into a regular savings account where you can't draw it out. Lock away your savings in a bond paying 6.05% or something similar

Then sit down and budget with your dp/dh

you live together and he may declare he's hopeless with money - well he's not a child and needs to be either stepping up and budgeting or going without. Why should your finances suffer, future pension etc due to his mistakes every month?

Whittle back your expenses to the knuckle - what do you really need to pay for every month:

council tax
mortgage
utilities - water, gas & electric
tv licence, one streaming service & internet
mobile phones, how many do you pay for and are they all needed - can you go on sim only and save £££
house insurance contents and building
Car Mot, service and fuel - do you need to make so many journeys, would an electric bike be better for some trips and ditch one car etc

Then look at the overpayment calculators - there is a great calculator on Martin Lewis site https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/