Mortgage Advice Please re 10 Year Fix

easylife73

Hi, looking for some advice about what to do next with our mortgage...

We currently have three mortgages (original plus two further advances that we have taken out over the years) -

Mortgage 1 - current balance £77,236.38 at 2.25% ends August 2036
Mortgage 2 - current balance £23,445.09 at 2.25% ends September 2036
Mortgage 3 - current balance £24,277.38 at 2.59% fixed until end of April, will then revert to SMR which is currently 3.74% ends July 2036

Total outstanding of £124,958.85 with roughly 19 years left on terms. Current monthly payment is £673.20 which will rise slightly in May. LTV value is below 60%.

Obviously looking into what to do when the fix ends. If we stay as we are the advantages are that two of the mortgages have access to payment holidays, but obviously we could get much lower rates.

We are considering combining the three mortgages, resetting the terms to 20 years (nice round number but would plan to overpay anyway) and fixing for 10 years. Obviously rates would be higher, around 2.89/2.99%. However, we are in the house we plan to stay in, in the area we want to be in, and more crucially have two teenagers, currently year 12 & 9...so 10 years would see them both through university with us knowing exactly what are mortgage costs are.

I'm worried if we only fix for a couple of years and rates rise that will then coincide with the eldest going to uni and we'll have issues! But on the other hand we've previously been tied in for 7 years when rates were higher and were stuck paying 7.5% whilst others were on much lower rate, which worries me too!

So...opinions please, what would you do?

getmore4less

If worried about cashflow in 10y time a longer term with overpayments will give more flexibility.

look at 20y or 25y or 30y

£125,000 1.89% paying £626 per month in 10y owe £68,366.

new payment @ 2.5%
10y £645
15y £456
20y £363.

easylife73

Not sure I fully understood that! We're not worried about cashflow in 10 years time (kids will be independent by then I hope!) more during the next 10 years. Don't really want to extend the term as we're mid 40s already so I think more than 20 years might be problematic anyway. And if we only fix for a couple of years and interest rates rise during that time s we could face a big rise in our mortgage repayment at a time that will already be more costly.

Not sure what your figures represent? 1.89% would be about what we'd get for a 5 year fix not 10...that would be more like 2.89%, so roughly £690 a month. Sorry if I'm missing the point!

AnotherJoe

easylife73 wrote: »

Not sure I fully understood that! We're not worried about cashflow in 10 years time (kids will be independent by then I hope!) more during the next 10 years. Don't really want to extend the term as we're mid 40s already so I think more than 20 years might be problematic anyway. And if we only fix for a couple of years and interest rates rise during that times we could face a big rise in our mortgage repayment at a time that will already be more costly.

Not sure what your figures represent? 1.89% would be about what we'd get for a 5 year fix not 10...that would be more like 2.89%, so roughly £690 a month. Sorry if I'm missing the point!

Very unlikely. Why pay an extra 1% for 5 years? Do you think then the next 5 will be so high that will cancel it out?

If rates rise it will be small increments and long durations between rises (thats what was said by BoE not me !! ) because anything quick and high on top of a fragile immediate post-Brexit UK economy would plunge it into recession.

In your position I'd fix for 2 or 3 years at most at probably around 1.5% and overpay as if it was the 2.89% or even more. Each months over payment is then money directly off your mortgage balance and not useless interest.