Overpayment - What would you do?

Waffle_On

SOMEONE wrote: »

Thanks for the latest comments.

Yes, that base rate isn't going to stay like that forever, and possibly not more than another 12 months, so maybe I'd be stupid to hold out for that and not address the rates today.

Yes, I am with Nationwide, I'm just not sure if I qualify for something when they already have me for another 3 years at 5.34%, but I'll look into those Ditch & Fix deals tomorrow, thanks

The other decision then, if I can go that route, is whether to wrap the 3.99% debt into a new deal too, I guess there's nothing to lose other than the ability to overpay several accounts at the same time.

Thanks so far, this is all helping loads and giving me different angles to consider

cheers

Don't forget to check the other terms before switching though. The rate when the deal expires could be different and the overpayment rules may be different too. Make sure you take it all into account before making a decision.

bylromarha

Have you played with all the overpayment calculators?

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

I'd advise throwing the money at the biggest debt, presume you can overpay by a little per month? Is it worth dripping the money in this way?

I'd also getting a redemption statement to see just how much it would cost you to switch the mortgage to a lower rate, and see if it's cheaper for you in the longer term.

SOMEONE_3

Waffle_On wrote: »

Don't forget to check the other terms before switching though. The rate when the deal expires could be different and the overpayment rules may be different too. Make sure you take it all into account before making a decision.

Thanks.

So on the 3.69% tracker (3.19% over the base rate) I have that is about to expire and move to the 3.99% SMR. I'm able to move to something like a new 2 year tracker at 1.34% with £900 fees, or 1.74% without. Or there's a "Flexclusive" deal for current account holders of 3 years at 1.79% over the base (so 2.29%) with no fees. That one instantly saves £60 a month from staying on the SMR.

Alternatively there's fixed rates:

2 years
1.84% + £900 fee
2.24% no fees

3 years
2.29% £900 fee
2.59% no fees

I really don't understand the fixed rates with fees associated with them. Yes you get a better rate but you save less money over the term? For example, taking the two 2 year fixed options above. At 1.84% I would save £900 a year, so over 2 years £1,800 but I've paid half of that back in fees.
At the 2.24% rate I would save £763 per year, so £1526 over 2 years, and no fees applicable. So why would anyone pay that £900 fee, or am I missing something.

With all of the above, they all would return to the SMR which is currently 3.99%. ERC remain 3% on 2 or 3 year deals (goes up to 4% and 5% for 4/5 year deals), and standard overpayments allowances apply.

Just seen this for ERC on that 3 year Flexclusive Tracker deal
"No Early Repayment Charge, allowing unlimited overpayments and penalty free switching No Early Repayment Charges, so you can overpay by as much as you like, when you like, or switch your deal at any time without incurring any charges"

That's gotta be the best option for me here. You think? Saves £720 per year, no fees and no Early Repayment Charges

Might have to look into moving the largest mortgage onto this too.

SOMEONE_3

bylromarha wrote: »

Have you played with all the overpayment calculators?

I'd advise throwing the money at the biggest debt, presume you can overpay by a little per month? Is it worth dripping the money in this way?

I'd also getting a redemption statement to see just how much it would cost you to switch the mortgage to a lower rate, and see if it's cheaper for you in the longer term.

Thanks. I've had a little look at the others this morning. It's a little difficult to way everything up into one analysis though since there isn't a calculator out there for someone with 3 different mortgages on the go.

So you think dripping £500-£1500 a month into 1-3 accounts may be the way forward rather than paying off a lump sum.

I spoke to someone at my Nationwide branch yesterday but there's only so much they can help with. I need to call the Head Office and get a redemption statement like you suggest

getmore4less

with fee based deals it depends what you owe so for some the fee is worth it others not. the higher the debt the more likely the fee deal is worth it.

What are the follow on rates on the deals this is critical to the choices.

SOMEONE_3

getmore4less wrote: »

with fee based deals it depends what you owe so for some the fee is worth it others not. the higher the debt the more likely the fee deal is worth it.

What are the follow on rates on the deals this is critical to the choices.

Ah I see, so I should ignore all with rates really then. They all appear to halve my savings.

The follow on rates for every deal is the same, they all go to the standard, current 3.99% SMR.

So whilst I was more concerned about holding out for that 2.5% BMR in 3 years time (that probably won't be there anyway), I could take 2.29% right now and in 3 years look for another deal that beats the 3.99% SMR. Which can't be that hard to find seeing as all 2-3 year deal today hammer that rate

getmore4less

As for drip feed. if you have say £500 with 3 options,

1.overpay the 5.34 penalty free
2.overpay the 5.34 with penalty
3. overpay the 3.99 without penalty

you save 1.35% on 1 over 3 and if the penalty is say 1.75%(I think that info is still missing?)

so for £500

1. save 2.22pm
2. pay an extra £8.75
3. save 1.66

So if you pay the penalty it takes £8.75/(£2.22-£1.66) = 15 months to recover the money.

This says if overpaying the 5.34% you should keep back at least 15 months worth of £500 pm overpayments (either from the lump sum or your overpayment funds

getmore4less

SOMEONE wrote: »

Ah I see, so I should ignore all with rates really then. They all appear to halve my savings.

The follow on rates for every deal is the same, they all go to the standard, current 3.99% SMR.

So whilst I was more concerned about holding out for that 2.5% BMR in 3 years time (that probably won't be there anyway), I could take 2.29% right now and in 3 years look for another deal that beats the 3.99% SMR. Which can't be that hard to find seeing as all 2-3 year deal today hammer that rate

although the 2.5 rate won't be there is will(probably) be cheaper than any other follow on rate.

if you can move the current 3.99% to a new lower rate then that will change the calcs above a lot.
need the penalty ERC on the higher rate deal

SOMEONE_3

getmore4less wrote: »

although the 2.5 rate won't be there is will(probably) be cheaper than any other follow on rate.

if you can move the current 3.99% to a new lower rate then that will change the calcs above a lot.
need the penalty ERC on the higher rate deal

Penalty rate on the higher rate deal is 3%. I paid £1800 last year whilst paying £60,000 off

SOMEONE_3

With drip feeding. That's pretty much what I've been doing for the last 6 months. The interest I'm paying on the 3.69% deal per month is about the same as the penalty fees, so I've just set aside enough money to knock £500 a month off until it expires.