*** Best Mortgage for us - advice please ***

yescubedesign

My Mrs and I live in a house in Manchester which is currently on the market for £110K however we do not believe it will sell anytime soon (we believe given the area and given the current market it may well be years before it sells)

We bought our house five years ago on a 25 year mortgage when prices were at their highest and we went on a five year fixed deal at a rate of 5.35%

That deal has now ended and we are on the SVR which is 5.99%

We currently owe £80K on the mortgage and have £13K in savings.

We both have secure jobs and get paid on average £1,100 a month each with us usually earning an extra £300 per month in overtime

We worked out that through really hard work/overtime we come out with an average of £2800 between us each month over the last 12 months and this trend is likely to continue.

Our bills/shopping/travel everything all together costs around £1K with our mortgage costing £615.12 per month on top.

We are insured for everything such as death/mortgage gets paid off/ loose job/ mortgage gets paid/ buildings/contents/ injuries/ dental/ whatever happens with pipes etc in the home

We both have pretty much everything we want and as for holidays are happy enough to go to the cheapest place available, clothing we only ever buy when it's at least 50% off but usually £75% off and we are not fashion mad any how so basic stuff does us.

Therefore we could realistically over pay our mortgage by £800 per month giving us a few hundred quid to play with each month for clothing/ socializing

We used Martins over payment calculator and was astonished to find out that if we paid £13K (all our savings) off and overpaid by £800 per month we could pay off the mortgage in 4 years! as our mortgage stands.

We are more than prepared to do that, that way we will then have the mortgage paid off and will be financially stable enough to have a baby.

We do want to sell the house but not willing to go as a guide any less than £100K, if we did sell we would move in with my parents and save and work like mad, even getting a second job each working in a supermarket anything which will enable us to get a better house in a better area. (We both had hard times growing up and don't want that for our child)

We have come to terms with the fact that our house will probably not sell in todays market so we wanted to know what was the best thing to do, should we stick with our current mortgage, which is a high rate at 5.99% or switch to something else? We are aware that usually we can only over pay a mortgage by 10% but we don't have that problem on our current mortgage.

I really wanted to get a better rate, but didn't know the best one to get, I am of course cautious of the fact that if we do change we could get stung by the ERC and will not be able to pay off as much as we want, possibly?

We would go on any deal such as 20/15/10/8 year mortgage. I would prefere a fixed rate or an offset, I was looking at these but can't get my head round them, I'm not great at all this.

Please any advice would be much appreciated, what we should do, save, overe pay, switch, what term to go with, sort of mortgage, please we have been ripped off loads in our time together and nothing good ever seems to fall our way


Thank you for taking your time to read this
M&M

Morgage_Confused

Offset are ok but rates are not as good as other mortgage types.
Its a tad risky to chuck everything at the mortgage as sometimes circumstances change so its worth while holding a bit back. But overpaying is quite addictive once you realise how much you can save and when you have a mortgage free goal some years down the line.

If I were in your position I would just go for the cheapest mortgage you can find and overpay like mad whilst holding back a reasonable buffer. Have a look around but you probably want something like a fee free 5 year fix at something like 3.5.%. Or the cheapest tracker. Again you probably want a low fee one due to the "small" size of your mortgage.
Check the mortgage tables here...
https://www.moneyadviceservice.org.uk/en/categories/managing-your-money

DVardysShadow

Picking up on snippets

(We both had hard times growing up and don't want that for our child)

It hasn't done you much harm. Don't go overboard on protecting a child from hard times

I really wanted to get a better rate, but didn't know the best one to get, I am of course cautious of the fact that if we do change we could get stung by the ERC and will not be able to pay off as much as we want, possibly?

As you are now on SVR, there should not be an ERC

We used Martins over payment calculator and was astonished to find out that if we paid £13K (all our savings) off and overpaid by £800 per month we could pay off the mortgage in 4 years! as our mortgage stands.

Don't kill yourselves in the process. Plan to take a little while longer. Keep some of the £13000 back as an emergency fund. At the moment you get by on £1600/month. So keep £10000 back [6 months expenditure] - and as your mortgage reduces, you can reduce the amount you keep by.

Actually, this is where an offset mortgage would serve you very well - you could keep your savings in the offset account - effectively it would be paid towards the mortgage, but returnable if you needed it.

We do want to sell the house but not willing to go as a guide any less than £100K

If the house you want comes up at a good price, then there might not be a lot of harm in selling yours cheaper. Having bought high, you are now on top of the situation

Thrugelmir

yescubedesign wrote: »

We do want to sell the house but not willing to go as a guide any less than £100K,

Why? House prices fall as well as rise.

If you overpay the mortgage then you'll be saving yourselves interest.

ACG

Is your plan to sell the house to purchase elsewhere or sell the house and move in with parents?

It sounds like you have a deposit in place (the £13k), so you could still purchase a new property. With your current property you have a few options:
- Transfer it to a BTL mortgage, you probably wont notice too much difference in the interest rate, it may even come down. That way you can rent it out and any profit is an extra income.
- Get consent to let from your current lender and rent it out.
- Sell and use any extra money for a bigger deposit.

Im a little confused though, are you trying to secure a new rate or sell the property? Im not sure tieing in to a new mortgage is a great idea if your looking to sell, the last thing you want are ERCs which your unlikely to have if your on the lenders SVR.

5.99% for an SVR is quite high though.

dimbo61

While you are waiting to sell your property I would overpay as much as you can afford each month.
You need 6 months savings ( for emergency pot) and if this is £10K you could pay the other £3K off the mortgage saving you 5.99% TAX free.
Paying off the mortgage is great BUT its not the bee all and end all and life is for living!
The more you pay off the mortgage the more equity you build up in your home and the smaller the mortgage payment.

yescubedesign

ACG wrote: »

Is your plan to sell the house to purchase elsewhere or sell the house and move in with parents?

It sounds like you have a deposit in place (the £13k), so you could still purchase a new property. With your current property you have a few options:
- Transfer it to a BTL mortgage, you probably wont notice too much difference in the interest rate, it may even come down. That way you can rent it out and any profit is an extra income.
- Get consent to let from your current lender and rent it out.
- Sell and use any extra money for a bigger deposit.

Im a little confused though, are you trying to secure a new rate or sell the property? Im not sure tieing in to a new mortgage is a great idea if your looking to sell, the last thing you want are ERCs which your unlikely to have if your on the lenders SVR.

5.99% for an SVR is quite high though.

Basically we do not want to live where we live at the moment, our friends live in South Manchester and S Manchester is such a better area overall. We understand that our house is not selling, although it nicely decorated/good solid house in a sought after area, but people just don't have the deposit these days - especially as the government is doing this 5% deposit and people are worried about their job so are just renting. We beleive we would be better off trying to save on our mortgage as the confidence level of us selling is not high!

There is no point in us looking at other properties as if we found something we like we wouldn't be able to buy as we can not sell ours and would not be able to afford the mortgage on two properties. We would move in with my parents until the right property comes up. We would get a second job so we could get a better LTV deal

ACG

Wythenshawe?... thats South Manchester lol.

I know what you mean though, i spend a bit of time in North Manchester and i always start to relax more the closer to Didsbury/Stockport or even Trafford that i get.

You could look at using your savings as a deposit and getting consent to let from your existing lender OR a BTL mortgage on your current property, that will result in you being able to move... not ideal having to worry about being landlords, but so long as you dont cut corners just to get someone in there you should be fine.