Remortgage or remain on A&L SVR

EricTheKing7

I have recently come to the end of a 5 year fix with A&L (Santander) and am paying the SVR of 4.99%. I'm reasonably happy with this as it gives me the flexibility to make overpayments or reduce my payments. Originally our mortgage was meant to end in June 2020 but after a couple of sizable overpayments and keeping our payments the same -£550 - we are likely to finish paying in just over 2 years from now. It's only a small mortgage now, approx £14000, £2000 of which is interest only. I know I could mortgage to a better deal but is it worth the effort for £10 a month with so little time left to pay? I have no other debts to consider, so my mortgage is my only real debt. I just wondered if I was missing anything obvious in the way of options, I like the flexibility of the svr but I like the idea of saving a bit on my monthly outgoings also. I wood appreciate any advice or alternatives that I haven't thought about.

ACG

There are not many lenders who would do a 2 year term and not many who would do under £25k. I think by the time you have finished messing around you could probably save about £1k over the 2 years - doing some very basic sums.

You could maybe ask Santander if they have any retention deals. Stick to your monthly repayments for 2 years and save up the difference once the 2 years are up you could just then pay off the lump sum? Thats probably a quicker/easier way and will still save you something.

trippy

I would have thought you could get your interest rate to 1.99% with that LTV so you'd be reducing the amount of interest you'd pay over the next 2 years. Not sure if you can borrow such a small amount though.

Thrugelmir

Costs of remortgaging may outweigh any benefits.

If £2k of the mortgage is interest only then you need to find the capital over the next 2 years in event. So overpay by much as you able and clear the mortgage as quickly as possible. Even if it requires sacrifices in the short term.

EricTheKing7

Thanks for the quick responses. I think I will take ACGs advice and see what Santander can offer, although I doubt anyone will offer me 1.99% trippy without a huge fee which won't be much use with my small balance. I have previously spoken to Santander to see if I could use my regular overpayments to pay down the interest only part of the mortgage but they refused unless I made minimum overpayments of £500. It sounds like I might be doing the right thing already, and it doesn't look like the rates will be heading upwards anytime soon, but I'll see what Santander have to say. Thanks all.

Joe_Bloggs

I am in the same dull end of mortgage repayment situation. Got 18K to go over 7 years. Overpaying approx 280 per month (Gone in 2 years). Fortunately the debt tracks the BofE rate so its 2.5% rather than 4.99% I guess some lenders need to exploit the willingness of borrowers to pay more.

Save up the chunks of £500 and throw them at that mortgage.
Splat! Take that! Santander with your 4.99%

J_B.

EricTheKing7

Thanks J_B. I like that plan, that would make an immediate impact. I think I have the MFW feeling and the sooner I can wave goodbye to Santander and my mortgage the better. Perhaps I'll take a look at the mortgage free wannabe forum for more inspiration.

getmore4less

This is % CC territory. look up stoozing.

If you are overpaying it does not matter which bit

EricTheKing7

getmore4less - l'm pleased to say (if a little embarrassed) that I've never had a credit card so stoozing would be a bit of a challenge for me, although it does sound like a great system for the brave.
I know it doesn't make a great deal of difference which bit I pay off, but I'd still rather have one lump sum to pay off rather than 2 elements just for neatness sake, and as the IO part is the smaller of the 2 then I'd like to see that cleared as soon as possible. Psychologically it would also feel great to finally see the back of what is left from a poorly performing endowment policy.

MysteryMe

I had a smallish mortgage that was part repayment part interest only and re mortgaged onto a Stafford Railways BS SVR at 3.49% a few years ago. The charges to make the switch were reasonable and I can make any over payment I like. Not sure what their minimum lend is though and whether the charges would outweigh paying less APR %.

Joe_Bloggs

I would say that paying 4.99% SVR interest is a signal from the lender to go borrow from somebody elsewhere. But on 14K with the end point in sight it makes no sense to change.

Attacking the closest financial goal gives the soonest sense of achievement that leads to a virtuous cycle and less envelopes in the post.

@EricTheViking said

Psychologically it would also feel great to finally see the back of what is left from a poorly performing endowment policy.

Do you still have this policy ? How has it performed ?

I suspect that the reason Santander have a high SVR is because of their excellent interest bearing current account that I find most rewarding.

J_B.