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'The UK's mortgage ticking time bomb... Mr Osborne will you help?' blog discussion

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'The UK's mortgage ticking time bomb... Mr Osborne will you help?' blog discussion

7 replies 4.2K views
This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.




Please click 'post reply' to discuss below.

Replies

  • I have 40k left to pay on my mortgage with 9 year term left . I regularly overpay by £500/month. Should I continue to overpay and reduce term time or Should I use my savings to completely pay off my mortgage ?
  • edited 19 February 2014 at 9:23AM
    ashleyriotashleyriot Forumite
    89 posts
    Ninth Anniversary Combo Breaker Debt-free and Proud!
    edited 19 February 2014 at 9:23AM
    Fruitbop wrote: »
    I have 40k left to pay on my mortgage with 9 year term left . I regularly overpay by £500/month. Should I continue to overpay and reduce term time or Should I use my savings to completely pay off my mortgage ?

    I'd clear the mortgage; the amount of interest you would save now would far outweigh the interest you are earning on £40,000.

    Plus, if the interest rates do start to move up then you'll be earning more interest on those £500 overpayments and that will add up quite nicely, especially if you have it all in a decent ISA.

    Edit: I'll caveat that with confirming you are not on a fixed-term mortgage that would impose fees for overpaying too quickly - if you're standard variable then go for it.
  • RafterRafter Forumite
    3.8K posts
    Another point to consider is your tax position.

    Certainly if you are a higher rate tax payer you may not want to give up any savings in ISA's to pay off your mortgage because you would then lose past ISA allowances permenantly.

    If as ashleyriot says you are paying a high SVR rate of interest you may be better of switching supplier. Look for a 'fee free' flexible mortgage (perhaps even an offset) though because with the amount outstanding a big up front fee will add significantly to the loan.

    If you can save 1% over 9 years on a 40k repayment loan that works out at c. £1,800 interest saved, so not to be sniffed at.

    Good luck.

    R.
    Smile :), it makes people wonder what you have been up to.
  • edited 19 February 2014 at 12:14PM
    lxlnmslxlnms Forumite
    1 posts
    edited 19 February 2014 at 12:14PM
    Everything possible to avoid the time bomb will be /is being done. In any case the risk of a run of the mill housing bust is not the main problem.

    We lost the plot on housing some time ago.

    Most are only dimly aware that the bricks and mortar bit of their property is only worth 30-100K at best (yes, even increasing numbers of £1m+ properties).

    Nobody is pointing out that housing inflating 5, 10 even 20% above inflation, is a long term 'boiling frog' type disaster.

    Indeed with the increasing proportion of our incomes that we spend on housing ourselves it makes a spectacular mockery of inflation targeting.

    This is a bubble on a bubble. I'm more worried about the latter.
  • So is Martin's article indicating that switching to a 5 year fixed-rate mortgage in 2014 is probably a good plan, seeing as the Bank of England is predicting base/inflation rates to probably rise over the next few years?

    My variable rate flexible mortgage (Virgin One account) is at 3.9% currently. I don't really want to contemplate the repayments rising any more...
  • Martin,

    I don't understand what you want the Chancellor to do.

    Surely you don't want the government to mess with the markets just to protect the financially ignorant. There will always be casualties, its redistribution of wealth and no asset class is exempt.

    The whole macro economics issue is something you, me and just about everyone else cannot begin to understand. Yes as always use your voice to help the financially ignorant, explain the importance of hedging their interest rate and the liquidity benefits of low LTV or the dangers of high LTV.

    If you have been talking about this for the last 4 years then you haven't a crystal ball as to how and when this ticking time-bomb will end, there could be another 5 years of low interest rates first.
  • "Yet this wasn’t a party political point" incorrect, the housing bubble is a political choice to generate false economic growth in order to buy votes, which will disappear in a debt explosion just like the last boom.
This discussion has been closed.

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