Remortgaging

[Mmmcheese89]

Hi all

Looking for some opinions but also open to alternative ideas.

Mortgage fixed rate is ending. I have roughly 40% equity thanks to local area improvements and just general market growth. (And of course, from paying my mortgage).

It's seemingly impossible to get a interest rate below 5% now. My credit rating is excellent. I don't have a great income but I don't live in an expensive area. I don't have any dependents but I'm single so only one income. Mid-late 30s.

In the next 12 months my wage will increase as I move up a band (NHS) with further steps over the following years. I'm seriously unlikely to ever live with someone and I don't want children.

The decisions to make are: pay 150% of value of current mortgage payments, fixed rate for 10 years, then be mortgage free. I could comfortably afford the increase but it's 0.5% higher interest.

Pay roughly same amount as I do now, 5 year fix but with 10 years left after that (I would remortgage to another fixed rate). Of course I could continue to afford for the next five years.

I was lucky enough to be mid-fix when there was the last big interest rate scare. I know no one can predict the future, especially not with current political climate. But I honestly don't know what to do for the best.

Sorry it's so long. I didn't want to drip feed.

When I renew I go for the smaller monthly amount but over pay each month (need ro check the terms and conditions). You'll still pay it off quicker but also have the flexibility if circumstances change. I'm a single parent was in a professional job but became disabled/unable to work and was given ill health retirement having that smaller monthly amount became the thing that kept a roof over our heads.
Also if you have a 5 year rather than 10 year fix you could save some of your salary increase and pay off a lump sum at the end of the 5 years (if you max out your annual over payments). It gives you flexibility which I find as a single income household a safety net).
If you go on a mortgage overpayment calculator (Martin lewis has one) you can mess around with the numbers and see what suits best.

Separate from overpaying (which is typically limited to 10% before additional charges kick in), just save the +50% in an ISA with a comparable interest rate. Set up a monthly standing order to avoid the temptation of spending it. If everything goes to plan you’ve a lump sum to pay off once the fixed rate expires. And if you circumstances change then you have that lump sum as a safety net.

I would go with the 15 year term, pay roughly what you're paying now and then put the extra 50% extra in high interest savings account. It means you still have an option to chuck it at the mortgage later if you need to become mortgage free early but the savings will help you feel secure in the event that you lose your job or need to quit for whatever reason. Roof needs £10k repair etc.
I say this as an also mid 30s , single income, public sector worker
I've started building up my savings, I still haven't hit £10k but in the event the boiler breaks or whatever I can cover most things without going into masses of debt and if I don't need to use it, then it can continue to grow.