Mortgage Money Worrier

Minefield, I entered it a little under 5 years ago, taking a 5 year fixed deal, on my own, at 32, I don't know which details should be kept private when discussing mortgages and my personal finances, but I'll figure that out as my quest to cure myself of this mortgage continues....

I'm quite a savvy shopper with a couple of strange but effective practices

I work 30 hours a week in a shop

i'm a good saver with a good credit score

I can get lost in details and I don't think my 1st mortgage deal was as good as it could have been as I relied on a mortgage advisor who obviously had a commission to earn, and I didn't know enough to go it alone at that time

now I'm looking to switch my deal I want to know as much as possible before I apply for a new fix

I have a couple of questions, and I appreciate you may want to know more about me before you can offer your thoughts and answers to my own questions but i'll give a little summary

I took a 5 year fix according to my budget 5 years ago, with a 15% deposit, and a 35 year term which allowed for a 10% over payment each new year (fairly standard I think) however in a matter of months I was earning a few hundred quid extra per month, with nothing extra to spend it on (other than the annual over payment), I'm not clued up on investing as such, and the banks don't pay much interest, I played around with a couple of 5% savings accounts to give me a few extra quid

I didn't even know how the over payments worked originally which was a huge oversight on my part so for the first 2 years I didn't make any extra payments, however, I didn't spend the money either, so I still have a lump sum I can now pay off when the term finishes, but I did take 9 years off the mortgage in the first 4 years, saving 5 years of interest payments

I can do that, right? just pay another hefty deposit when the term ends, then apply for another fix for the balance?

so what now? this is where your thoughts guide me...

I appreciate any help and advice and i'm fully aware that all my decisions are my responsibility, so all feedback from here will be treated on a purely hypothetical basis
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Replies

  • kev2009kev2009 Forumite
    842 Posts
    Part of the Furniture 500 Posts Name Dropper
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    My 5 year fixed ends in 2 years and i've only just made my first overpayment as was first property i bought. I would say look at how mch you rproperty is worth, look at howmuch you owe and work out the LTV value, then look at mortgage sites to seewhat rates they are offering, any fees etc and then decide do you want to fix it at x% for 2 years, 5 years, 10 years OR do you want to go variable rate?

    For me, I currently plan to go 5 years fixed in 2 years time as I prefer knowing the rate is fixed and i have a fix amount i need to pay each month and know where i am. From next year, I am planning to try and pay off as much as i can reducing my monthly payment so i can keep the term the same incase interest rates go up and when i re-fix in 2020, i'm planning to continue overpaying as much as i can and reduce the term and by the end of that 5 years (2025) i'm hoping to be in a much better position and owe alot less than i can then decide maybe on a 2 year fixed etc but first things first, just focusing on next 2 years to down down as much as possible.

    Also worth noting, don't put all your money at the mortgage, ensure you have a emergency fund in case of unexpected things happen i.e boiler, roofs, job loss etc and also ensure you contribute to a pension.

    I've spent last 3 years building up some emergency fund and hence just made a small OP, i pay into company pension and therefore am starting to now look more at OP mortgage as i'm now in a position to start doing this. I'm hoping to get my mortgage finished alot sooner than the 30 year term i originally took it over.

    Kev
  • edited 2 December 2018 at 8:20AM
    V7RNRV7RNR Forumite
    8 Posts
    Second Anniversary First Post
    edited 2 December 2018 at 8:20AM
    Hi Kev, Thanks for the reply, that has crossed my mind, firstly I had thought about keeping a few quid for emergency as I've always done that anyway, but then I thought about going "all in" and if an emergency arises, currently interest rates are low on a separate loan so that would be my contingency, but then the loan rate could shoot up before I need one, so I also thought what if I get a loan while the rates are low anyway, then I have both the contingency and a bigger chunk off the mortgage already, and although I'd be paying both the loan and my mortgage, which i can still manage, the overall interest I'd be paying would actually be much less, am I just trying too hard to be mortgage free?

    I don't understand lowering the monthly payments and not the term during your current fix, or at any other point really? Surely if interest rates rise in 2 years before you fix again it's still better to have already shortened the overall term in advance?

    Edit, I need to look what interest I can get on savings too as that might be a reason not to go "all in"
  • edited 2 December 2018 at 8:36AM
    A_Frayed_KnotA_Frayed_Knot Forumite
    3.2K Posts
    Sixth Anniversary 1,000 Posts Name Dropper Photogenic
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    edited 2 December 2018 at 8:36AM
    :wave: Hello and welcome

    Popped over to your diary from mine. First of all - you can reveal what you feel comfortable with, usually - the term left in your mortgage, and monthly expenditure outgoings, then the lovely MFW's will comment and suggest how you can reduce these.

    If you are staying with the same mortgage, then it may be possible to secure a new deal up to 3 months in advance, and in doing so, you can . . .

    Well if I tell you what I done, you can see if this applies to you, think that may be easier. When going for my 2nd deal, I knew knew how much I could afford monthly, so asked how many years do I need to take out to have this monthly mortgage (knew roughly) as played about with the calculators. Reduced from 14 1/2 to 8 years at this stage.

    Monthly o/p's then started, some months more than others, then at the end of the year, calculated my 10% allowed, took off all the o/p I had already made, then tried, if possible to take my last o/p up to the 10% limit, using most (but not all of my savings) then in the NY I made small o/p's and replaced my savings - that's what I felt comfortable with.

    As for lowering monthly payments, (which was not on my agenda, at any stage in my mortgage) it may be you have a big holiday coming up, or circumstances change, or have a very large mortgage and need a bit of breathing space, or want to save/invest if rate is higher than your mortgage rate.

    Good luck and keep reading the diaries, that way you will gain a wealth of info.
    Always have 00.00 at the end of your mortgage and one day it will all be 0's :dance:
    MF[STRIKE] March 2030[/STRIKE] Yes that does say 2030 :eek: Mortgage Free 21.12.18 _party_
    Now a Part Timer from 27.10.19
  • BakingCBakingC Forumite
    119 Posts
    Third Anniversary 100 Posts
    You say about interest rates being so low so you would get a loan in an emergency rather than holding back mortgage overpayments.

    This is surely counterproductive. I doubt your new mortgage rate would be higher than the rate you would pay on another loan so you would end up paying more interest overall.
  • LibranharryLibranharry Forumite
    39 Posts
    Mortgage-free Glee!
    Goodness me! You sound just like me!

    My five year term ends next year too and I'm hoping to pay a lump sum off on top of the 10% fee free over payment. My bank have told me I can look at it four months before my fixed term ends, but I need the time to make the 10% payments. ��

    I've taken 13 years off my mortgage in two years. It's totally possible! Keep going! You can do it!
    The aim is to be mortgage free by 2020. :j:j
  • kev2009kev2009 Forumite
    842 Posts
    Part of the Furniture 500 Posts Name Dropper
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    I am only reducing my monthly payments for 2 years, reasons being I have worked out that IF i overpay and reduce the term and interest rates rise to say 4% or more, due to the shorter term, it would then bump my monthly payments up a fair bit which i didn't want but IF i overpay the same amount but reduce my monthly payments, i get a few quid in my pocket which will be paid in the over payment so not actually keeping the money and if interest rates rise to 4% or over my monthly payment potentially will be pretty much the same that i pay now (before OP). However, once I fix for another 5 years then I will change to reducing the term as I will be in a position i hope to OP each year which wiil have more impact.

    As another example, when i took my mortgage out initially, i wanted 25 years but I ended up not fitting into 25 years so they moved me to 30 years,the different in monthly payments was a reduction of over £100 a month by having it over 30 years which ironically was much closer to what i realistically wanted to pay per month so was a win win for me :) I already had plans to OP and i'm hoping to repay in less than 30 years so i wasn't too fussed, just that feeling when they say it that the 30 years would take me right up to retirement isn't good :)

    Kev
  • V7RNRV7RNR Forumite
    8 Posts
    Second Anniversary First Post
    As I mentioned I needed to research more towards loans and stuff, but that was quick to do, my mortgage rate is currently considerably higher than current loans I can find, but as you say current mortgage deals are probably lower than current loans, I can pretty much rule out a loan now

    I do feel even with the small number of replies and the research I've done, despite entering this minefield fairly blind 5 years ago, I've landed myself in a reasonably good position, credit to my existing common sense, so my only dilemma is how much to put down and for how long when negotiating my next fix, and is my boiler and my car gonna give up altogether soon.....

    Time will tell

    I'll keep reading
  • edited 11 October 2019 at 9:08AM
    V7RNRV7RNR Forumite
    8 Posts
    Second Anniversary First Post
    edited 11 October 2019 at 9:08AM
    I got my Letter from my current Mortgage lender telling me what happens when my fix ends, now having made a couple of overpayments my remaining term is currently 20 years and my rate, a hefty 4.14%

    i've done some shopping around and despite only making 2 overpayments, one last year and one the year before, I hadn't spent the money I could have over paid for the other 3 years of my fix, therefore I had a nice amount in my savings to negotiate a new deal with

    today I made the call to get a new deal, and I was given 2 options, completely new deal with a small admin fee and all the required checks for income and affordability on a timescale of 4-8 weeks, no solicitors fees for remaining with my current lender

    completely new deal elsewhere, which would possibly included solicitors fees again

    or just renew my existing deal with my existing lender, I was told I could make the large overpayment I wanted to, slightly early without paying any early payment charge, again because i'm staying with my current lender, however I can only pay the same or reduce my payments, not increase them, as increasing them is what would trigger a new application and affordability checks, which although I have no problem with the checks themselves, avoiding the checks streamlines the process and causes me less anxiety, I don't like waiting, I like things done

    Now the market seems as such that most lenders are offering similar rates, and due to the remaining balance I have, the differences wouldn't make enough of an impact for me to faff switching to a new lender, so I decided to take an easy option to stick with my lender, renewing at the same payments, getting a better rate and clearing a lump sum to reduce the remaining term

    the result, my mortgage was down from 35 5 years ago to 20 years this morning, and my new deal takes it down to 11 YEARS, when I get my new paperwork to return in a few days, and the rate has gone from 4.14% to 1.99%

    given that I chose the option that doesn't increase my monthly payments, I will be overpaying every year, I could be mortgage free at the end of my new fix !!! :j

    unless I buy a new car :D
  • TropicallyTropically Forumite
    427 Posts
    Fifth Anniversary 100 Posts Name Dropper
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    Can't believe the cheek of them to offer 4.14% first and then 1.99% after! Was the mortgage OP huge and pushed you down several LTV brackets?
    Mortgage started at £318,000 in June 2016. Original MF - 2041 :eek:
    2nd Property Mortgage at £275,000. Mortgage free: 2049 :eek:
    Total OPs: £29529
  • V7RNRV7RNR Forumite
    8 Posts
    Second Anniversary First Post
    the original term was at 4.14% 5 years ago, they offered various options a bit over the 2% mark when I called up, the new overpayment was a 5 figure sum, but it didn't make much difference on the new rate, not even a quarter of a percent was gained I don't think, it was more significant in shortening the remaining term

    had all my confirmations so i'm done and dusted for another few years now :D
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