Paying off a lump sum after Fixed Rate Mortgage Ends

LeagueOfWolf

Hey I need some advice.

So when my 2yr fixed mortgage rate ends next year can I pay off some of the mortage with my savings and then remortgage it AFTER ? So I dont face overpayment charges??

Do people generally remortgage after their deal ends? Mine was only 2 years. I want to do another one but for 5 years.

Also, if I don't remortgage straight away do I lose the right to do it and be forced into the market value rate for another year?

Sorry this is my first home any help is appreciated!

Thanks

BROKEN

Hi League of Wolf
I wanted to leave my 5 year fixed (£400 monthly) pay lump sum off and mortgage to the same lender so my monthly would be £100 but I have to wait till my 5 year fixed period is finished in 2020.If you look at your last mortgage statement it should tell you what the charges are but there can be no charges if you remain with the new lender.

dimbo61

You might well be able to pay off 10% each year as most lenders also this even when in a fix.

flashg67

Yes you can pay some off, but check your terms as some may have limits whether in a fix or not

Always worth seeing what the best deal will be after your fix ends - most default to standard rate which is usually higher than another fix. You may not even need to change lenders.

The variable rate doesn't force you in to staying on it for a fixed period, but may mean you're paying more until you find your next best fix

LeagueOfWolf

Thanks for your help!

Should you overpay monthly or save up in an ISA and then overpay at the end of the term?

How do I calculate it seems difficult to figure out which is best option?????

The mortgage interest is 1.9% and will go up to around 4% in May when the 2 yr fixd ends.

The ISA is 1.46% for 1 year fixed. If I start it now it will overrun and go into September time next year so I would 4 months of the bank default interest rate of about 4%.

So I don't know whether to pay off each month and not have an ISA account OR save up in ISA and get my interest then pay the 10% max overpayment when the mortgage fixed interest ends? I haven't timed it very well

What have you guys done?

lee111s

Pay it off the mortgage (providing you have a decent chunk of savings incase of job loss, illness etc).

LeagueOfWolf

Thanks!
How much is decent savings "emergency" fund would you say ? Enough for 1 month of living without a job?

Thrugelmir

Up to six months would be more prudent. Though depends what line of work you are in.