Couple of questions about going to SVR

morg_monster

We took out our mortgage for our first house in Dec 2009 on a 3 yr fix at 4.99% (Lloyds lend a hand mortgage if that is relevant). The fix is coming to an end in January as far as I can tell although oddly we haven't had any communication from the provider about this - so that's my first question - should we already have heard from them? I'm surprised they haven't tried to sell us a remortgage yet. We usually get our annual statement just after Christmas.

The other and main question is about calculating our new monthly payments on the SVR, which is 2.5% for us (so we have no plans to remortgage at the moment but pay down as much of the capital as we can while interest is low). I feel I should know the answer to this as maths is my specialist subject... but how do I calculate the new monthly payment with an online calculator, do I just replace the interest rate with 2.5% but keep the mortgage total (£220k) and term (25 yrs) the same? Or do I reduce the term to 22 yrs, and/or the total to the current total whatever that is? We want to reduce our monthly payments to the lower total and overpay in lump sums occasionally, rather than overpay monthly for various reasons.

I know I can get the answers to all my questions and more from C&G but I keep forgetting to dig out the paperwork and bring it to work with me to call them. So thank you in advance!

kingstreet

Put the current balance, remaining term and 2.5% as the rate in the calculator.

You'll probably get your notification in the next few weeks.

Jimbo1976

I am not sure why Lloyds have not written to you. I would have expected them to try to sell you a new fixed rate (which would then go onto a new SVR much higher than the one you will shortly go to)

There are a few great mortgage calculators on these forums. You will need to enter all of the variables, ie outstanding balance (now), interest rate (ie 2.5%) and then the number of years left. You should put in a term of 22 years as thats how long you have to pay off your balance. Can you remember when you completed? You have have more or less than 22 years left and if you actually have 21 years 9 months then your payments will be higher than if you have exactly 22 years left.

dimbo61

You could use " whatsthecost" website and put in accurate figures.
the 2.5% rate is very good if you have a high LTV over say 75%.
Why not keep the mortgage payment static and keep paying the same amount as you have for the last 3 years !
If you do this then you will be overpaying every month and not notice when rates DO GO UP!!!

morg_monster

Thanks for the responses, that's great. My gut told me that was the correct way to do it but I couldn't quite trust it :-)
Too impatient to wait for the letter so I used an amortization site to find out that we should have approx £205,500 left of capital as of Dec 11th 2012 (3 years from when we completed), so working it out roughly looks like our monthly payments will decrease from £1290 to £1015 ish in January which is great.
Seems that with C&G (who seem to run the mortgage now - maybe we've slipped through the cracks of Lloyds and C&G in terms of selling us a new mortgage?) we can pay off up to 10% a year either as a single lump or spread out so that gives us lots of scope to pay off.

It's quite good timing, we don't have kids yet so not too many financial commitments, and both our salaries have increased quite a bit in the past three years, plus DH has paid off his student loan. Also he's getting an unsociable hours allowance from work at the moment so it's a double whammy - extra money AND almost zero time together to spend it!! I'm hoping we can pay the mortgage down to 70% or even more by the time we are looking for a bigger family house in a few years time, it'll open up a lot more mortgage offers, especially as DH's salary especially is likely to level off now for the next 10 yrs or so.

I will call them to double check all of this and get exact numbers if I haven't heard anything by the first week back at work after Christmas but this is all useful for estimates. Thanks!

morg_monster

Just wanted to add - dimbo we were originally going to keep the payment the same, it's just that our life is a bit in limbo at the moment, and we'd prefer to save the cash and then periodically pay off from that in small lumps. For various reasons I won't bore you with it might be very useful to have some cash at fairly short notice (haha, nothing illegal!), and I don't think we can take it back out of the mortgage once we've put it in.

I'm feeling all nostalgic now - haven't been on MSE for a while - forgot how helpful everyone is. It's so nice to look back and see how far we've come financially, it feels so long ago when I started using MSE in 2004 as a young 20 something just starting to work, paying off overdrafts and CCs incurred from uni, travelling and the general frivolity of youth! Although I don't use it so much on a day to day basis now it's so reassuring to know it's still here when I need it