Had a mortgage too long - it's going, going, gone!

Ali-OK

Thanks Hidden - you're a star for crunching those :A

I've come up with similar figures I think - based on new interest being £114.70 lower p/m x 60 = £6,882 saving - so that'd make it a £1,300 real term saving after ERC charges and £305 after product charge. Plus further interest saved from ongoing OPs. Not a huge amount in it but not a loss either which is good news.

The only bit of criteria I don't fit is lenders have put up income requirements for I/O (min £50-75k salary), plus I think rates will be higher in 2 years time...so seems an opportune moment given everything else.

I'm doing the staying up late and waking up early - 4 hrs sleep last night.

Hope you get an earlier night, after seeing the New Year in though!

liltdiddylilt

I lost you!! And it just shows how long I have been gone!!

Missed you and your ordered updates... not to mention epic overpayments! Looks like life is treating you well enough. I hope Christmas and New year were fab. Heres to a fab 2016 with health and wealth top of the list.

xxxx

shangaijimmy

All sounds like your working your way through a plan of attack. Our fix is up March 2017, so im hoping rates will stay the same for 12 months so i can jump onto a 3-5yr fix. A 5yr fix would really give me a target to finish, but hey ho there's a fair way to go before we get to the end of this fix!

Ali-OK

liltdiddylilt wrote: »

I lost you!! And it just shows how long I have been gone!!

Missed you and your ordered updates... not to mention epic overpayments! Looks like life is treating you well enough. I hope Christmas and New year were fab. Heres to a fab 2016 with health and wealth top of the list.

xxxx

Hi Lilty :wave:

Lovely to hear from you and hope you had a great Christmas with Jelly and hope family are well too.

2015 flew by and who'd have thought I'd be in Year 3 of ridding myself of the mortgage millstone :cool:

All the best for 2016 too and I'll be checking into your diary for your updates too

shangaijimmy wrote: »

All sounds like your working your way through a plan of attack. Our fix is up March 2017, so im hoping rates will stay the same for 12 months so i can jump onto a 3-5yr fix. A 5yr fix would really give me a target to finish, but hey ho there's a fair way to go before we get to the end of this fix!

It's a guessing game and minefield! I'm going on mortgage market and rule changes, so another 5 yr fix now will put me in a better position overall with the added 3 yrs at 2.34% (compared to 2 left at the mo). Should leave me needing a 2 yr fix after that, then SVR to finish off and a savings lump sum thrown at it

Piece of cake! :rotfl:

Skinnylatte

These posts are all a bit technical for me at the moment, I have so much to learn!!

Ali-OK

News from my lender is they have offered me:

5 yr fix at 2.59% I/O, Expiry 2nd March 2021 no booking fee or

7 yr fix at 3.19% I/O, Expiry 2nd March 2023, also no booking fee

Have to pay the ERC upfront but they are discounting that by 20% so £4,465 (rather than £5,581.25) of my savings will be paying for that and mortgage balance won't go up.

Costs/savings:

5 yr I/O £240.92 - saving £1,674.80 over 60 months after ERC charges

7 yr I/O £296.73 - costing £1,673.80 more over 60 months after ERC.

Paperwork on it's way to me for the 5 yr fix but have 14 days to change my mind . Tricky decision as the 7 yr one was tempting as still 0.5% cheaper than my current 3.69% rate and rates should be much higher at that time...but who knows.

Thoughts anyone?

patanne

Just a thought, but have you tried working out the difference it would make taking into account any overpayments you are hoping to make (realistically). That should reduce your LTV and maybe the rate of your next fix.

Do you intend to keep to your current mortgage payment amount or will you lower it to what you have to pay?

hiddenshadow

patanne wrote: »

Just a thought, but have you tried working out the difference it would make taking into account any overpayments you are hoping to make (realistically). That should reduce your LTV and maybe the rate of your next fix.

^ this

We already locked in our rate but with a spreadsheet that handles multiple rates and timeframes, it was easy to see how much (or little) a different rate would save us when it counted OPs. You should get more accurate numbers with a full amortization schedule, which might help determine a clear winner.

If it were me, I'd go with the 7-year fix if I knew I'd get it paid off in those 7 years, just to have the payments/interest known for the remainder of the mortgage. If not, I'd go with the 5-year and take advantage of the lower rate. (That's just gut feeling, though, I'd also run the spreadsheet numbers to make sure they agree )

Luckyinlife

Personally i would go for the 5 year fix and hope that rates are under 3% when it comes to renew

Im sure with your LTV you can get the best rates around tho maby even worth looking around at other banks you have ?

I was in the same situation tho
Had a rate of 6.4% wanted to change badly payed 2k to get out of it saved myself 2k a year even after paying the fees

Is it any cheaper to go for a repayment mortgage ? to get a better rate

least you have 2 great options tho which will save you money which is the main aim of the game

Ali-OK

Thanks Patanne - good idea to look at that.

Had a quick play with comparing repayment mortgages at the durations and rates, both with same SVR at the end and the 5 yr one comes out about £1k cheaper. But SVR is likely to rise. Still a guessing game!

LTV is nice and low now at 36% (on lender figures) and 40.05% on my (what I think is) more realistic figure - and their min LTV for best rates is 60%, so am well below that.

I don't think I'd get a better interest rate unless I change deals to a Repayment mortgage and I don't really want to do that as I'll get stifled by 10% max OP ceiling when I'm just coming to a position where I should start to go over that - I/O has a 20% ceiling and a bit more flex (albeit £500 min OPs).

I think it comes down to do I want the security of 7 years or 5 (or even 8 as they can offer me one of those!) but at the increased cost of 0.5% on 7.