Repeat Fix/Tracker deal until tail end of mortgage

pricedout_1

SVR interest rates are typically double that for 2/3 years fix/tracker deals.
Is it the case that most people simply re-mortgage onto new deals at the end of a deal period until the tail end of the mortgage and then simply pay off the remaining debt without penalty?

Thrugelmir

Remortgaging is switching to a new lender. As the mortgage balance reduces most people will find it unecomonic to switch. Choosing a product from those on offer from their existing lender is the only viable option. 

pricedout_1

Thrugelmir said:

Remortgaging is switching to a new lender. As the mortgage balance reduces most people will find it unecomonic to switch. Choosing a product from those on offer from their existing lender is the only viable option. 

I thought remortgaging is the term used for the same thing whether its a new lender or your existing lender?
But in any case, the same question applies... why would anyone let themselves slip into an SVR on their mortgage? Can you simply repeat the process of getting a new deal with a lower rate (without extending the term of the mortgage) and then at the tail end just pay it off? What am I missing or is it that simple?

getmore4less

Most people just switch to a deal,  some take out a longer term one like 10y to EOL the mortgage with a known payment.
As the capital owed goes down  the saving in the last couple of years can be quite small

pricedout_1

getmore4less said:

Most people just switch to a deal,  some take out a longer term one like 10y to EOL the mortgage with a known payment.
As the capital owed goes down  the saving in the last couple of years can be quite small

So what I said is perfectly feasible? I can just keep arranging a new deal on a rate lower than the SVR (without extending the term) until the mortgage is paid off? If this is the case why would anyone ever let themselves slip into an SVR on their mortgage?

dimbo61

Because people move home, relationships break down, people die, some forget or just don't bother if the remaining mortgage balance is low

pricedout_1

Thanks for all replies. Essentially then, I can recalculate a lower projected/estimated amount of interest that might actually be paid back over a typical 25 year repayment mortgage as most mortgage calculator projections I assume just place everyone on the SVR after the deal period... which it appears is not what happens in reality... for most people.

AnotherJoe

that is correct, it would be wholly misleading to think you'd be on the SVR for most of the mortgage 

Thrugelmir

pricedout_1 said:

Thrugelmir said:

Remortgaging is switching to a new lender. As the mortgage balance reduces most people will find it unecomonic to switch. Choosing a product from those on offer from their existing lender is the only viable option. 

I thought remortgaging is the term used for the same thing whether its a new lender or your existing lender?
But in any case, the same question applies... why would anyone let themselves slip into an SVR on their mortgage? Can you simply repeat the process of getting a new deal with a lower rate (without extending the term of the mortgage) and then at the tail end just pay it off? What am I missing or is it that simple?

The term "mortgage" comes from the legal charge placed on the property to secure the debt. For intents and purposes you have a loan. Remortgage refers to the fact that the legal charge has to be reassigned to a new lender. 
As the balance reduces you options are restricted to those offered by your current lender. 

getmore4less

pricedout_1 said:

Thanks for all replies. Essentially then, I can recalculate a lower projected/estimated amount of interest that might actually be paid back over a typical 25 year repayment mortgage as most mortgage calculator projections I assume just place everyone on the SVR after the deal period... which it appears is not what happens in reality... for most people.

Forget the full term cost projections and the APR(full term) that is given both useless practical pieces of information.
not only do you tend not to stay on the SVR it is variable anyway so just a guess like any other rate you choose to use beyond any known fixed rate period.
in my life time base rates have been between 0.1% and 17% 

When I first got a mortgage the rough estimate was you would pay double with interest on a 25y term
now 20%-40% is a reasonable guess with the lower end(20%-30%) if you don't start out with a very high LTV/Rate
if rates start to climb the number goes up quite quick
1% 13%
2% 27%
3% 42%
4% 58%
5% 75%
6% 93%
7% 112%