Advice on re-mortgaging PLEASE

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I have a fixed rate (under 4%), interest only mortgage of £50,000 on a £400,000 house which comes to an end at the beginning of Feb., with Roya Bank of Scotland. Obviously I won't get this sort of rate now, but would like to do the same sort of thing again BUT with the option of being able to make overpayments or even pay it off in full whenever I wish without penalty. I think that I saw something advertised along these lines by Halifax, but can't now find the paper. R.B. of S. have given me info on 2 porducts..2yrs fixed at 5.19% and 5yrs fixed at 5.49% but with penalties for early repayment, and 6.04 % with no penalties... Any advice or suggestions? I am SO impressed with how many people have gathered so much useful information. I retire in 14 years, , with a reasonable income and would like to gradually pay the mortgage off before I retire.

lisyloo

HSBC are offering a one year fixed at 3.79% which I think is a pretty good deal.
I don't think the fees are too bad either.

I am not sure about overpayments but at that rate you would be better off putting the money in an ISA.

In general if you have a small amount of overpayments, then you are generally better off getting the best rate you can and putting the overpayments in ISAs or a bank account.
If you have high overpayments then consider an offset mortgage. The rates are higher but there is a tax advantage (you have to pay tax on any interest in a non ISA account).

Depends on how big your overpayments are, what your tax rate is and also whether you have a non tax paying spouse.

If you can provide a bit more info on those questions then I'm sure you'll get more help.

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Thank you for your very welcome advice... sounds a pretty competitive rate although you don't say how long the deal is for... will definitely investigate... of course you are right about putting any overpayments into an interest free account...which I already have... no spouse, widowed some ten years ago so dabbling away... kids at university etc... doing ok SO far BUT.....!!!! Thank you SO much for your help...

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Just realiseed that I haven't asked you what is an off set mortgage?

Walletwatch

Just realiseed that I haven't asked you what is an off set mortgage?

It is effectively, a combination of a mortgage and a savings account rolled into one, where the amount of savings you put into the account goes to reducing the principal that is used to calculate your interest. Thus, the higher the amount of savings you put into your offset mortgage, the lower the interest you pay, and hence the higher the proportion of your monthly instalments that go towards repaying the principal amount.

Two advantages that come to mind are (a) you see the direct impact of your savings in reducing your interest expense on the mortgage and (b) you save the tax that you would have paid on your interest income, if you had put the money into a simple savings account.

The downside is that offset mortgages tend to be charged a higher interest rate than an ordinary one, so it makes sense only if your savings are higher than a particular proportion of the mortgage amount.