How best to do this in the cheapest way?

[ROYGBIVain]

I took out a fixed rate 1.39% mortgage in 2021, it expires in 2026. I have 62k left to pay. I won’t be able to afford the hike when my fixed rate ends, and frankly would rather spend the extra on nice things in life rather than exorbitant mortgage interest. If I want to move to a cheaper house that frees up some equity but pays off the mortgage exactly by Aug 2026 (current provider will let me port) how would I calculate this? I pay £520 a month currently for my mortgage.

Or would anyone advise a different route and why? One of the estate agents I had round last week said I was still young enough to take on a bigger mortgage (I’m 46 and working with a child) but I haven’t really got my head around paying such a huge hike in the monthly mortgage if I have to get a new deal in 2026.

Are you sure it will be a 'huge hike'? If you can get a new rate in about 18 months' time of, say, 4.39%, then by my calculations you'll be paying about £595 a month. Doesn't really seem worth the upheaval and expense of moving, imo.

Don’t listen to an estate agents advice. Higher house prices mean higher commission for them.

To actually move house with solicitors fees, removal fees etc will be probably 10k if not more so take that in to account.

If you like your house then stay put.

Not sure it will be a "massive" hike.

I am going from 1.39% to 3.89% (5 year fixed) in Jan. My payments have gone from £1,012 to approx £1,230.

Approx £220 increase. Not ideal and get confused when people state their mortgage has doubled.

Based on the fact your mortgage is half mine initial payment, I would est the increase being approx £120. Appreciate this is a very simplistic calculation

You could possibly extend the mortgage term so that although the rate goes up you still pay around the same monthly.

Speak to a mortgage advisor not an estate agent, they’re not mortgage experts.

Moving house will also cost you money in solicitors & estate agent fees.

Moving house costs loads of money. You've got a relatively small mortgage. Stay put and try to prepare for the hike. How much do you think it will go up by?

Thanks all. Tbh I am not sure exactly what it will go up by, but from using the calculator on Zoopla when looking at houses etc I’m expecting it to double - am I so wrong??

Id really like to move anyway. This house and garden is too much maintenance for me and I’m tired of having to do it since becoming a single parent. Plus really want a kitchen diner where dc and I can be together in the evenings and not diff parts of the house.

I was thinking that you should extend the term as well. Moving house can cost thousands .

You could lengthen the mortgage but they'd probably charge you a fortune there too.
I used to sit with a paper and pencil doing the sums in a way I understood. You have to study it a bit.

OP, I think you have around 10 years left to pay on your mortgage. VERY rough calculations suggest the monthly payments on a 5% mortgage rate of £62k will be £650 pcm - so £100 more than you are paying now. Is that affordable? As PP, moving house will cost thousands.

The Bank of England have suggested they expect to lower the base rate a few times in 2025. It will depend on RR in the April budget though. If it moves down 2-3 times that would take it down to 4 percent and it could go down another 0.25 in early 2026. I wouldn't worry about it now. Wait until towards the end of 2025 and see where base rates are then. You could always extend your mortgage over a few more years. Moving homes is expensive.

Like others say the interest rate won't hurt you as much as you think on a small mortgage

Plug your numbers in here to see:

news.bbc.co.uk/1/hi/business/7042204.stm

If you want to move anyway and don't want to pay any more on your mortgage then it sounds like your best option is to sell your current home and buy something a little smaller and cheaper - you've got around 18 months to sort this by the sounds of it so not in any major rush.

However as others have said your mortgage isn't going to go up much per month at all and by the time you have to renew the rates will have hopefully come down a little more than what they are now! I doubt we'll see 1.39% for a long time, if ever, but they maybe back down to 3% in 18 months if things settle down so your mortgage may go up by less than £100 a month by then!

Check with your bank because although they will port mortgages, they often won't do it to a cheaper property.

Your payments won't double OP, not at all, so I would suggest you start looking at calculators as pp suggested to be really clear on the figures before you make such a big decision.

Your mortgage of 62k is very low for your age and unless you are a particularly low earner, should be reasonably comfortable. You could always look at extending the term if that would help, depending when it's currently set to run to.

Obviously if you want to move anyway that's a different matter, but I think moving to a cheaper house and losing equity at your age, may be less beneficial to you in the long term, if you can manage the repayments for a few more years as then you'd have a more expensive house to move on from in future. So by all means move if it suits you but I'd hate for you to move based on the figures when it won't be anywhere near as bad as you anticipate.

Are the Zoopla calculations looking at the full price of the house for the mortgage? Presumably you have a fair bit of equity at this stage so only need to borrow the 62k you have left to pay.

Just done a quick calculation. Assuming you have 15 years left on your mortgage, if you were to remortgage NOW on a fixed rate there are deals for under £500 a month.
If you have less left than 15 years, just extend the term by 5 years or so and payments will most likely stay the same.

How much could you sell your current house for and how much would new house be?

Thanks everyone. I know moving is expensive but there are a good few reasons why I want to move, I don’t want to stay here.

The house would probably sell for around £270k (average 3 bed semi), and I would aim to spend £240-250k on the next house. Currently £62k left on mortgage, by the time this current mortgage ends I guess it’ll be around £50k left to pay. Please tell me that’s not a nutty thing to do? Aim is to move somewhere we’re happier with, pay off some small credit cards and cover a newer car, anything else left over is a bonus.

I'm a bit confused over what you're trying to achieve. Your initial post suggested you wanted to be mortgage free in a cheaper house
However if you sell yours for £270k once you've paid back the £50k left on the mortgage you'll have £220k. Then you want to pay off credit cards and buy a car then you'll have to pay stamp duty and fees. You'll end up with a mortgage not far off what you've got now except you'll be in a cheaper house?
You'll still have the issue over it going up when you change rates but you are worrying about the increase a bit too much. It won't double

Thanks for pointing this out jmhao, I don’t understand mortgages very well and what bit comes from where and what part goes where when I sell 🙈 I just want to move

Just keep it simple. Work on having around £220k left once you sell yours. Work out how much you need for a car and the credit cards. Then some for stamp duty and fees. Whatever is left you have as deposit for next house.
If you're 46 you've got lots of time to repay a mortgage and to keep the payment low enough so you can still enjoy life
A good broker is what you need

This is really helpfull. I was hoping to have £20k left over for car, credit cards and a nice holiday. I’m assuming £7-10k for moving and solicitor fees. If I’m
working backwards from a £270k sale, what should I be budgeting for the next house? I’m generally very good at maths but I’ve found the mortgage thing very confusing.

£190,000 if you want to be mortgage free.

Personally I’d stay put if you can afford it. I’m in a similar situation £50k mortgage left and going from a 1.49% to 4.29% interest rate. My payments are going to increase by around £55 a month.

The part of your mortgage that will double (or triple!) is the interest element, the capital repayment part is affected only by the remaining term. As you are in the second half of the mortgage term, the impact of increasing interest rates will typically be minimal as the majority of your monthly payment is capital, and the interest element is reducing all the time.

For example we are 14 years into a 25 year mortgage of £181k, £95k left to repay. Payments were £740 per month on a 1.79% rate and we’ve agreed a new deal of I think 3.94% which is £830 per month approx. The interest element has slightly more than doubled but over £600 per month is capital repayment at this point, so the impact is low. If I was in the first 5 years of the mortgage (or the mortgage was massively bigger) the impact would be much higher.

Hope that explains it, I don’t think it makes a difference if you move or not but if your mortgage is smaller you could offset the interest increase and pay the same amount.