Mortgage rate too low?

clod

Just been doing some sums & I think I'm only paying around 1.4% interest per year on my mortgage.

I owe around £72000 and am getting a monthly interest charge of £84.

I can't find any lenders offering anything like this rate (my current lenders website cheapest rates are more than double this).

Anyone know if this is likely to be a mistake on the lenders side? (or my calculation?) - or is this a typical amount of interest to pay.

Thanks for any advice!

kingstreet

Is it a repayment or interest-only mortgage and what's the remaining term?

£72,000 at 1.4%pa interest-only is £84 per month.

clod

yes is interest only offset mortgage, but don't have any significant funds to offset the balance.

remaining term is till I reach 65th birthday which is nearly 20yrs away.

had the mortgage for 10+yrs - no special rates that i know about

Is 1.4% unusually low?

Wh05apk

My guess this is Woolwich, on a lifetime tracker rate?

They had some great lifetime tracker rates a few years ago, not fantastic at the time, but now are unbeatable, do not give it up!

kingstreet

You'd better start putting some money away somewhere to pay the mortgage off when it expires. In the interim, enjoy that rate.

clod

It's not Woolwich, & i'd rather not say who it's with in case it is an error on their part.

I'm mainly asking because I had a redundancy payment earlier in the year and I was thinking the best (and safest) thing to do would be to use it as offset against the mortgage - but am now thinking i might be able to get more interest putting it into a savings isa which pays more than my mortgage interest.

sammyjammy

clod wrote: »

It's not Woolwich, & i'd rather not say who it's with in case it is an error on their part.

I'm mainly asking because I had a redundancy payment earlier in the year and I was thinking the best (and safest) thing to do would be to use it as offset against the mortgage - but am now thinking i might be able to get more interest putting it into a savings isa which pays more than my mortgage interest.

If you won't say how do you expect people to help? It won't be a mistake, I'll bet my cat on it (the ugly one ). They really aren't going to hunt you down for posting on an internet forum you know. There are quite a number of people on similar or lower rates.

kingstreet

clod - have a look at the key facts illustration (KFI) or mortgage offer from when you took out the mortgage.

We need to know what the "follow-on rate" is after your initial offer ends. It's in section 4 and section 6 of the KFI.

Wh05apk

kingstreet wrote: »

clod - have a look at the key facts illustration (KFI) or mortgage offer from when you took out the mortgage.

We need to know what the "follow-on rate" is after your initial offer ends. It's in section 4 and section 6 of the KFI.

I suspect this will be the follow on rate, now on a life time tracker.

somethingcorporate

clod wrote: »

It's not Woolwich, & i'd rather not say who it's with in case it is an error on their part.

If it is an error then you'll still have to pay back what contractually you both agreed to so really zero harm in naming them, in fact it is going to be easier for people to confirm that it is not an error.

1.4% is a great rate but not implausible given the pre-crash trackers available.

kingstreet

Wh05apk wrote: »

I suspect this will be the follow on rate, now on a life time tracker.

I agree. I'm expecting BoE base rate + 0.9%, or something similar. I'd like the OP to actually establish if it's correct, so he can stop worrying about "being found out."