[Closed] Sorry mortgages again!!!

Hmmm don't know... But interested as I am in a similar position. I am with nationwide on bmr at 2.25 and overpay by 200 a month.

I have been sticking for now because my deal gives me payment breaks / holidays for up to 12 months and also I can access the overpayment if I need extra money at anytime.

I have the option to fix for 5 years at 1.95 percent with no fee but kind of like the idea of having the above options.

A 2 year fix would be too short I would think as from what I have read, it looks like rates are going to rise shortly all be it very slowly.

Hmmmmm

Bear in mind that it could be a 2.5 or 2.75 variable in the next 12 months. Or sooner.

Can you not put all your figures into this and work out total repayment over the full term of the loan?

https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

why can't you overpay? lots of lenders allow you to fix and overpay, if your lender doesn't find one that does! 🙂

Depends on the size of the mortgage I think.

My approach would be to keep the outgoing the same if you are living okay with it now.

So if on the current 2.25% + £200 overpayment you are paying out say, £1000 a month, then when you switch to the 1.54% then make your payment and put the remaining (£1000 - payment) into a savings account (ISA?).

Then after two years, when you come to remortgage again, you have a big lump sum to pay in, assuming your next mortgage allows overpayment.

But apart from all that the other thing to consider is: two years is a pretty short time. Consider the arrangement fees when working out of it is worth switching. Not point in going to a lower rate for 2 years if that only just covers the arrangement fee.

You save (2.25%-1.54%) on a big amount £60/month saving on £100k

You put £200/ month in an isa and earn bugger all

No idea if 1.5 2 uear fix is good but i d fix as rates are expected to rise in nov, only 0.25 but its the direction i d be concerned about.

Best put overpayments into a separate account.

On a 2 year deal are overpayments much of an issue? You'd only lose the difference in interest on the overpayments between the mortgage and a savings account. And if you are prepared to put the money into a fixed term savings account then you might get >1.5% anyway*?

We just fixed for 5 years at 2%. Could probably have got a better deal if we'd shopped around but as I'd lost my job last year we didn't want to go through the process of a new application so stayed with our current lender.

*I've not checked but even with the base rate this low banks still need money in their accounts so have to offer something.

[edit] just googled it and there are plenty of fixed term savings accounts >1.5%.

Don't know much about mortgages but our deal runs out in the new year, will be looking for a 5 year fixed because of good ole Brexit

Take the lower rate and save the overpayments, IMO.

Or reduce the term so your payments are as high as you want them to be, gives the a very similar outcome as an overpayment, just without the option to reduce payments of things change.

TBH you can almost certainly beat 1.5% on small amounts of savings (several current accounts for example), so you might actually be better off saving than overpaying

Edit: we just fixed for five years to bridge the credit choas, and took a slightly higher rate to get the stability

I'm afraid you'd have to work it out to see if the increased rate of repayment and therefore reducing interest payments, when you overpay offsets the lower interest rate but a slower rate of repayment and therefore a slower rate of interest reduction. Go on a mortgage calculator and have a play to see if you pay it off any quicker at the lower interest rate.

Don't know much about mortgages but our deal runs out in the new year, will be looking for a 5 year fixed because of good ole Brexit