Which way to go now rates look 'ify'?? 23 December 2010 at 12:32PM in Mortgage-free wannabe 2 replies 740 views

de1amo

İ am looking for a considered answer to my musings!

İ have a 55k mortgage and due to prudence i have saved 28k but hold off paying it into my mortgage because i earn more on it percentage wise--my mortgage is 2pc svr and my savings rate is 4pc less basic tax.
İ cant get a new mortgage for 55k anymore due to circumstances but i could get a remortgage if i reduce it by my savings.--i feel paying in my savings might leave me exposed in these times of uncertainty so i am hesitant.
i just wonder what the tipping point is in looking at becoming mortgage free in view of todays warning on interest rate increases?

LilacPixie

todays warning IMO doesn't actuall mean anything. It really was only confirmation that rates will not stay at 0.5% forever. There is still the question of when and by how much rates rise. I personally think it will only be .25 every 2 or possibly 3 months with 5% not being seen until 2015.

I guess the circumstances surrounding your inability to get another 55k mortgage will be a big part of things as is you current deal, are you on a BoE tracker deal?? Have you worked our what your mortgage monthly payment would be with a BoE base rate of 5%? Can you afford that amount? Could you afford that rate if you only had 27k outstanding on your mortgage?? Many lenders have a minimum they would lend would a 27k put you below that??

My fix rate ends Novermber 2012 and once it does I was hoping lender SVR to still be interesting and worth a punt for a while and then remortgage to an offset deal because our mortgage payment v's income is only about 23% of take home wage after pensions at a 6% fix so I would welcome being able to save/offset or overpay as much as possible at that time. I also have a 'bond' maturing in May 2012 which i will be using for a larger one off payment one fixed rate ended.

de1amo

İ have actually left the uk and rebuilt my life abroad and just earn an ocupational pension in the uk--İ have businesses and homes abroad but cant link them to anything the banks consider as income for a mortgage.--i have about 75pc ltv with 55k outstanding but the banks are so tight as i am sure you know. my uk income is 7500. İ am in no way stretched and have seen this 55k cost me 230 a month before it went onto the banks svr back in 2007.
Rate increases will actually improve the exchange rates and i could export my savings into accounts paying 8,5pc less 15pc tax abroad but its a risky call!--its reading how these rates will rise and making the wise choice and time