Overpay of fix?

joebmc

I’ve just come off my fixed rate with nationwide and gone on there svr (2.5%). House is worth £190,000 - £200,000 and I owe £140,000

I could probably afford to overpay buy around £400 a month now with the reduction in our mortgage bill till the end of the year but am wondering if it’s worth it if say interest rates shoot back up by then and I could only get a fix for around 6%

Any ideas?

dimbo61

Nationwide have a 5 year fix at 5.28% for existing customers fee £299.
If you are only paying interest of 2.5% on your mortgage right now then you should be
1 clearing any other debts such as credit cards, loans etc which have a high rate of interest.
2 saving into ISA,s which are paying more than 2.5%
3 overpaying the mortgage by at least the amount you are now saving each month IF not more.
You have a debt and the sooner repaid the less interest you pay and sooner you are mortgage free.
I like the security of long term fixes but that me
£140,000 over 22 years at 5.28% works out at £900 a month.

RobertoMoir

joebmc wrote: »

I’ve just come off my fixed rate with nationwide and gone on there svr (2.5%). House is worth £190,000 - £200,000 and I owe £140,000

I could probably afford to overpay buy around £400 a month now with the reduction in our mortgage bill till the end of the year but am wondering if it’s worth it if say interest rates shoot back up by then and I could only get a fix for around 6%

Any ideas?

The overpay or fix debate is a matter of personal requirements, taste and opinions on what the market will do. I can tell you that I've gone for a 7 yr fixed via C&G because that works for me, but that doesn't really do anything to tell you that a 5 yr fix at a different rate from mine with a different company is the right option for you.

I agree with the idea of clearing any other business first, and/or overpaying while you have the opportunity.

joebmc

I have no other debts, so i guess its matter of choice and risk, think i might overpay for now and keep my eye on the fixes.

Trying_to_be_good

Nationwide allow overpayments of up to £500 per month on their fixed rate products, so why not fix AND overpay (as much as you can afford up to the £500)?

Lynn11

We are similar to you and just came off our fixed deal with nationwide and we are going onto 2.5% in june and upping our overpayment figure for the month we are on the varible. We were advised to go onto the varible by our financial adviser but we will be keeping an eye on things as wish to fix prior to the interest increasing quickly. The 5yr deal we were advised of by nationwide was 4.98% with a fee of £299.

joebmc

Trying_to_be_good wrote: »

Nationwide allow overpayments of up to £500 per month on their fixed rate products, so why not fix AND overpay (as much as you can afford up to the £500)?

Because if i stayed on the svr i could over pay a lot more than if i fixed now at around 5%, its a gamble i know but from what i'm hearing intrest rates arn't going up any time soon.

Cozworth806

Assuming a term of 20 years, the difference of 2.5% SVR to 5.28% fixed is £200pm, so it seems that you could fix and still overpay, or shorten the term as well, but where interest rates (and fixes) will be is anyones guess.

I went for a 10 year fix earlier in the year but again for my own reasons.