Mr and Mrs P are going mortgage free...

MrsP1983

Haven't been on here in a while as term has been manic and I'm also exam marking for two boards at once (a stupid idea, in case anyone's wondering about doing it).

We're keeping on keeping on. Have started thinking about what to do when our fix ends next May - Martin's email today said fix now and I'm a bit worried that by May 2014 rates will have risen and we'll come out of a fix and straight into a market with no low fixes. Hum.

MrsP1983

Where's this royal baby then eh?

We had our 5 days away with my mum last week and managed to stick to our (cash) budget fine, so that was a relief. MiniP and I went to ToddlerSense today (free trial) which was fun but costs £70 per 10 sessions. Youch. Not sure whether we're going to sign up or not...

kansaskitty

Hi MrsP, I've been AWOL for a while but that's amazing news about being at home with Mini-P and still earning the same from tutoring. I start my NQT year this year so it's definitely something for me to consider a few years into the future when littluns come along. How is it working out for you? Gad to hear you stuck to your budget for your time away with your mum, have you had your decadent 5th anniversary wknd away yet? Hope you had/have any amazing time! KK xx

MrsP1983

I have been away for aaaages! Rubbish. We've carried on with the (somewhat limited) OPs that we've been allowed to make, and socking my tutoring earnings into savings/takeaways. We need to get a bit more gazelle intense (as Dave Ramsey would say) as MiniP2 will be joining us in August!

Our fix is up at the end of May and we have a plan though I'm slightly worried we're missing something vital. Any thoughts on the below?

Current mortgage: 4.79% fix ends in May and reverts to APR of 3.94%. 30 year original term, 28 years left. Payments currently approx £650, will go down to approx £550. We have made max overpayments allowed since the beginning, so have actually been paying approx £740. OPs will no longer be restricted once the fix ends.

Have found a new 15 year mortgage for when the fix ends (no exit or other fees but booking and valuation fees for new mortgage will be approx £600). 2 year fix at 3.49%. Payments will be approx £790 and overpayments are unlimited.

After paying the fees we will only actually save about £800 over the two years, BUT we will be slashing the remaining term from 28 years to 15 years and keeping the payments we make roughly the same, having the security of another fix and still be allowed to make overpayments.

Despite not saving much actual cash in the short term, this is a sensible move, right? I feel like it is but I'm slightly scared to change the status quo! Our other option would be to stay on the current mortgage's APR but keep our payments at the higher rate so we're making bigger overpayments each month. I'm nervous that the APR will jump when interest rates go up though and then our 'over'payments will just be swallowed and become part of our regular payments. I also hate the albatross of 28 bloody years around our necks, though have no intention of still having a mortgage by then!

We can't find a better deal than the 3.49% as our LTV is about 82%.

Any thoughts or do we need to just stop overthinking it and do it?

MrsP1983

Also, does anyone know how banks value houses for remortgages?

We bought in May 2012 for £129k.
Two estate agents in November 2013 valued it at £135k-£140k.
Zoopla values it today at £142k.
Other houses on the street (albeit ones in horrible condition with 2 beds instead of 3) recently sold for around £125k.

I'm worried the recent house sales on the street will skew the valuation negatively

MrsP1983

Bumping for any advice pretty please!

edinburgher

Are you planning on changing lender?

If so, they'll send out a residential valuation surveyor who will consider a range of factors (including condition of the property, value of similar properties sold, any distinguishing factors affecting value etc. etc.)

It could just be a 'drive by' survey, but Woolwich actually sent out a guy to visit us when we remortgaged last year.

If not, I get the impression that your existing lender will pretty much take your word for it unless you think that the value has changed dramatically.

Happier_Me

Can't really offer any advice on mortgage valuations. It's been a while since we had one done but I recall him using house sales as a guide as well as condition of our property . I wouldn't worry too much about this.

In terms of the two year fix. I would consider a 5 year fix before I would agree to a two year. None of us have a crystal ball but interest rates can only really stay as they are or go up and you could be exposed to higher rates in two years as a result. 5 year fixes are more expensive but it would be worth working out the overall cost of the upfront fees plus interest and comparing this to your two year fix.

The other comment is about your term. It's great to see it come down so much but there is some benefit in keeping a longer term and having a little more flexibility to overpay. You can OP the amount you want to without committing to this higher amount every month with a longer term. This protects you a little from any unforeseen circumstances such as job loss or unexpected reduction in salary. Or just those extra costs that pop up in life every now and then. I officially have 10 years left on the mortgage but at the rate I am overpaying our MF date is actually August 2016 - 2 years 5 months away. That's what I concentrate on.

MrsP1983

Thanks for the advice-it's so helpful to have unbiased opinions on these things.