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  • FIRST POST
    • -Jonski-
    • By -Jonski- 10th Oct 16, 1:22 PM
    • 16Posts
    • 2Thanks
    -Jonski-
    Mortgage/Remortgage Questions
    • #1
    • 10th Oct 16, 1:22 PM
    Mortgage/Remortgage Questions 10th Oct 16 at 1:22 PM
    Hi all,

    I've been looking over the site and guides for a simple answer to this, but I'm still a bit confused.
    Essentially, I'd like to get a 95% mortgage in the near future. Once I've built up enough equity after 2-3 years (10%+), I would hope to remortgage to get a lower % deal.

    I'm confused as to what values I actually remortgage on, what the early repayment charge comes from.

    For example, I'm looking to borrow around £150,000 total, and after 3 years, I'll have paid at least £27,000 in. Does that mean I seek a new deal for £123,000?
    Or do I need to find a mortgage to cover the whole total amount payable when the mortgage was taken out (probably around ~£210,000)

    Which of these figures does the early repayment charge come from?

    Any help on this much appreciated.
Page 1
    • glentoran99
    • By glentoran99 10th Oct 16, 1:29 PM
    • 3,710 Posts
    • 2,573 Thanks
    glentoran99
    • #2
    • 10th Oct 16, 1:29 PM
    • #2
    • 10th Oct 16, 1:29 PM
    There is only an early repayment charge if you are in a fixed period, your remortgage is the balance outstanding, How are you planning on building equity? are you banking on house prices rising our overpaying your mortgage?
    • Thrugelmir
    • By Thrugelmir 10th Oct 16, 1:34 PM
    • 51,224 Posts
    • 43,006 Thanks
    Thrugelmir
    • #3
    • 10th Oct 16, 1:34 PM
    • #3
    • 10th Oct 16, 1:34 PM
    For example, I'm looking to borrow around £150,000 total, and after 3 years, I'll have paid at least £27,000 in. Does that mean I seek a new deal for £123,000?
    Originally posted by -Jonski-
    The money you pay back is a combination of capital and interest on the debt owed. In the early years the repayment consists mainly of interest. As you chip away at the capital owed, the interest charged every month will gradually reduce. As a quide it's takes around 13-15 years for the monthly repayment to be more capital repaid than interest.

    If you've a particular product in mind. Post up the interest rate and term. Then we can give yo a more accurate figure of what you owe.

    An early repayment charge will only apply if you are still within the contractual period for the product. Remortgaging to another lender normally comes at a cost. So combined with the ERC there may no saving at all by switching.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • -Jonski-
    • By -Jonski- 10th Oct 16, 1:58 PM
    • 16 Posts
    • 2 Thanks
    -Jonski-
    • #4
    • 10th Oct 16, 1:58 PM
    • #4
    • 10th Oct 16, 1:58 PM
    The money you pay back is a combination of capital and interest on the debt owed. In the early years the repayment consists mainly of interest. As you chip away at the capital owed, the interest charged every month will gradually reduce. As a quide it's takes around 13-15 years for the monthly repayment to be more capital repaid than interest.
    Originally posted by Thrugelmir
    Thanks, I had misunderstood this point quite seriously indeed.

    So to be clear when remortgaging, I'll need to find a new mortgage to pay off the full amount of equity outstanding and the interest owed?
    • Thrugelmir
    • By Thrugelmir 10th Oct 16, 2:03 PM
    • 51,224 Posts
    • 43,006 Thanks
    Thrugelmir
    • #5
    • 10th Oct 16, 2:03 PM
    • #5
    • 10th Oct 16, 2:03 PM
    On remortgaging you settle the actual balance owing on that date. Future interest does not factor.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • Thrugelmir
    • By Thrugelmir 10th Oct 16, 2:07 PM
    • 51,224 Posts
    • 43,006 Thanks
    Thrugelmir
    • #6
    • 10th Oct 16, 2:07 PM
    • #6
    • 10th Oct 16, 2:07 PM
    Here's an example. A £100,000 mortgage repayable over 25 years at 4%.

    Date Interest Principal Balance
    Nov, 2016 $333 $195 $99,805
    Dec, 2016 $333 $195 $99,610
    2016 $666 $390 $99,610
    Jan, 2017 $332 $196 $99,415
    Feb, 2017 $331 $196 $99,218
    Mar, 2017 $331 $197 $99,021
    Apr, 2017 $330 $198 $98,823
    May, 2017 $329 $198 $98,625
    Jun, 2017 $329 $199 $98,426
    Jul, 2017 $328 $200 $98,226
    Aug, 2017 $327 $200 $98,026
    Sep, 2017 $327 $201 $97,824
    Oct, 2017 $326 $202 $97,623
    Nov, 2017 $325 $202 $97,420
    Dec, 2017 $325 $203 $97,217
    2017 $3,941 $2,393 $97,217
    Jan, 2018 $324 $204 $97,013
    Feb, 2018 $323 $204 $96,809
    Mar, 2018 $323 $205 $96,604
    Apr, 2018 $322 $206 $96,398
    May, 2018 $321 $207 $96,191
    Jun, 2018 $321 $207 $95,984
    Jul, 2018 $320 $208 $95,776
    Aug, 2018 $319 $209 $95,568
    Sep, 2018 $319 $209 $95,358
    Oct, 2018 $318 $210 $95,149
    Nov, 2018 $317 $211 $94,938
    Dec, 2018 $316 $211 $94,726
    2018 $3,843 $2,491 $94,726
    Jan, 2019 $316 $212 $94,514
    Feb, 2019 $315 $213 $94,302
    Mar, 2019 $314 $213 $94,088
    Apr, 2019 $314 $214 $93,874
    May, 2019 $313 $215 $93,659
    Jun, 2019 $312 $216 $93,443
    Jul, 2019 $311 $216 $93,227
    Aug, 2019 $311 $217 $93,010
    Sep, 2019 $310 $218 $92,792
    Oct, 2019 $309 $219 $92,574
    Nov, 2019 $309 $219 $92,354
    Dec, 2019 $308 $220 $92,134
    2019 $3,742 $2,592 $92,134
    Jan, 2020 $307 $221 $91,914
    Feb, 2020 $306 $221 $91,692
    Mar, 2020 $306 $222 $91,470
    Apr, 2020 $305 $223 $91,247
    May, 2020 $304 $224 $91,023
    Jun, 2020 $303 $224 $90,799
    Jul, 2020 $303 $225 $90,574
    Aug, 2020 $302 $226 $90,348
    Sep, 2020 $301 $227 $90,121
    Oct, 2020 $300 $227 $89,894
    Nov, 2020 $300 $228 $89,665
    Dec, 2020 $299 $229 $89,437
    2037 $1,015 $5,319 $22,476
    Jan, 2038 $75 $453 $22,023
    Feb, 2038 $73 $454 $21,569
    Mar, 2038 $72 $456 $21,113
    Apr, 2038 $70 $457 $20,655
    May, 2038 $69 $459 $20,196
    Jun, 2038 $67 $461 $19,736
    Jul, 2038 $66 $462 $19,274
    Aug, 2038 $64 $464 $18,810
    Sep, 2038 $63 $465 $18,345
    Oct, 2038 $61 $467 $17,878
    Nov, 2038 $60 $468 $17,410
    Dec, 2038 $58 $470 $16,940
    2038 $798 $5,536 $16,940
    Jan, 2039 $56 $471 $16,469
    Feb, 2039 $55 $473 $15,996
    Mar, 2039 $53 $475 $15,521
    Apr, 2039 $52 $476 $15,045
    May, 2039 $50 $478 $14,568
    Jun, 2039 $49 $479 $14,088
    Jul, 2039 $47 $481 $13,607
    Aug, 2039 $45 $482 $13,125
    Sep, 2039 $44 $484 $12,641
    Oct, 2039 $42 $486 $12,155
    Nov, 2039 $41 $487 $11,668
    Dec, 2039 $39 $489 $11,179
    2039 $573 $5,761 $11,179
    Jan, 2040 $37 $491 $10,688
    Feb, 2040 $36 $492 $10,196
    Mar, 2040 $34 $494 $9,702
    Apr, 2040 $32 $495 $9,207
    May, 2040 $31 $497 $8,710
    Jun, 2040 $29 $499 $8,211
    Jul, 2040 $27 $500 $7,710
    Aug, 2040 $26 $502 $7,208
    Sep, 2040 $24 $504 $6,704
    Oct, 2040 $22 $505 $6,199
    Nov, 2040 $21 $507 $5,692
    Dec, 2040 $19 $509 $5,183
    2040 $338 $5,996 $5,183
    Jan, 2041 $17 $511 $4,672
    Feb, 2041 $16 $512 $4,160
    Mar, 2041 $14 $514 $3,646
    Apr, 2041 $12 $516 $3,130
    May, 2041 $10 $517 $2,613
    Jun, 2041 $9 $519 $2,094
    Jul, 2041 $7 $521 $1,573
    Aug, 2041 $5 $523 $1,050
    Sep, 2041 $4 $524 $526
    Oct, 2041 $2 $526 $0
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • -Jonski-
    • By -Jonski- 10th Oct 16, 2:25 PM
    • 16 Posts
    • 2 Thanks
    -Jonski-
    • #7
    • 10th Oct 16, 2:25 PM
    • #7
    • 10th Oct 16, 2:25 PM
    Here's an example. A £100,000 mortgage repayable over 25 years at 4%.

    ...
    Date Interest Principal Balance
    Dec, 2018 $316 $211 $94,726
    2018 $3,843 $2,491 $94,726
    Originally posted by Thrugelmir
    Great, that's helpful. So, if we assume I took out a 2yr fixed and I wanted to remortgage in December 2018 and there are no ERC's.

    I would effectively need a brand new mortgage for $94,726, and would have built up $2,491 in equity via the mortgage in addition to my deposit and any overpayments ?
    • Thrugelmir
    • By Thrugelmir 10th Oct 16, 6:57 PM
    • 51,224 Posts
    • 43,006 Thanks
    Thrugelmir
    • #8
    • 10th Oct 16, 6:57 PM
    • #8
    • 10th Oct 16, 6:57 PM
    I would effectively need a brand new mortgage for $94,726, and would have built up $2,491 in equity via the mortgage in addition to my deposit and any overpayments ?
    Originally posted by -Jonski-
    Spot on.

    If you can make overpayments of any kind then over time you'll see the benefit. Will be slow to start with. As the saving in interest takes time to compound.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
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