Fixed rate due to expire

liubeliu

rothchick wrote: »

My fixed rate finished last November with Nationwide and I went onto the glorious 2.5% BMR rate. I continue paying the same as I did on the fix (£60 extra pm) This will take off approx 2.5 yrs off my term at current rate :j:j Also, protects me from future rate increases. I'm a very happy bunny

How does being on SVR protect you from future rate increases, the BMR is variable. The 2.5 years off term is assuming BMR stays at 2.5%. Just posting so you are not giving yourself a force sense of security, so apologies if I come across matter of fact.

latecomer

http://www.moneysavingexpert.com/mortgages/savings-vs-mortgage-calculator

Plug the figures in here to get an idea of whether you are better off overpaying or saving.

dimbo61

Hi Liubeliu if rothchick is overpaying by £60 a month then SHE? is still paying at HER? old fixed rate so rates would have to rise above her old fixed rate before she needs to up her mortgage payment.

dimbo61

Hi Popstar when are you moving home? will this be before the fix ends?
Are you borrowing more money ?
Will Nationwide allow you to go onto the BMR for a new property ?
If you only need a 8/10 year term then fixing for 4 years might be a good idea.
With a small ! mortgage of £40K the cost of changing lenders can make it more expensive than staying put

Thrugelmir

liubeliu wrote: »

How does being on SVR protect you from future rate increases, the BMR is variable. The 2.5 years off term is assuming BMR stays at 2.5%. Just posting so you are not giving yourself a force sense of security, so apologies if I come across matter of fact.

Less debt owed, less interest to pay. Even if interest rates rise in the future.

Often called Einsteins 8th law. Those that understand compound interest save it, those that don't pay it.

JimmyTheWig

hubb wrote: »

That's great advice folks. I do have savings but am not sure weather to overpay or buy ISA's. Closing balance at the end of last year was £33,662,72 with 11 years to go. we currently pay £322 a month if that helps :-)

That's a lovely low mortgage balance with what will be a lovely low interest rate.
Am "well jel"!

The general rule is that if you can get better that 2.5% (the rate of your mortgage) on your savings after tax then put the money into savings. If you can't then overpay the mortgage.
There are other benefits to putting money into savings (e.g. it gives a safety cushion if you need the money (though beware the temptation of spending it), you only get so much you can put into a cash ISA each year so some would suggest you fill yours up each year if you can, if rates change you can always "change your mind" and pay the savings off the mortgage), but generally speaking it's all about the rate.

hubb

Yes, I think the savings account is my best option. I like the fact that you can see the money building up and if an emergency comes along you have it as a bonus.