Mortgage broker - ask me anything

PieMistress

Hi, sorry I created a separate thread for this query then spotted this!  Wondering if anyone has any advice:

Hi, when I moved house 8 years ago I took over my Nationwide mortgage which was/is on the old Nationwide BMR and took out a new fixed rate for the increase to fund the new house.

So I have 2 different mortgages with 2 different interest rates. The 5 year fix expires in March 2022 on 1.89% (£37K remaining) and the other one is just chugging away on the Nationwide BMR of 2.10% (£57K remaining).  Remaining term is 12 years and LTV is approx 28-30%.  I have been overpaying a bit on both mortgages (capped on the fixed rate but no cap on overpaying on the BMR one). The mortgages need to keep the same term.

My dilemma is - with interest rates being low should I move the Nationwide BMR onto a fix now , just leave it where it is and stay on the pre 2009 BMR, or wait until next year and merge both of the mortgages together - although I am aware that the interest rate situation might have changed significantly by then. I do have savings so could overpay a bit more, but was unsure about putting a chunk into one of these mortgages given the uncertainly about employment with COVID (the BMR has no cap on % to overpay) . I do have savings in ISAs which as we know have poor interest rates but with 2 young children and working in a fickle employment industry I do need to keep some idea for emergencies/possible further education.
Thanks for any feedback.

Afternoondelight91

Hi guys
Thanks for setting up this thread.
I'm planning on moving house this year and I'm after some advice around early repayment on my current home. Apologies for my naivety. 

Assuming I have the financial flexibility to cover the remaining mortgage + any unforseen issues, what are the implications for the two scenarios:

Pay off my current house in full (inc early repayment charges), sell and then purchase new house using the 100% equity.

OR

Sell my current house, absorbing any equity. 

Purchase a new house with aforementioned equity and cash on hand. 

Grateful for any advice. 

K_S

PieMistress said:

Hi, sorry I created a separate thread for this query then spotted this!  Wondering if anyone has any advice:

Hi, when I moved house 8 years ago I took over my Nationwide mortgage which was/is on the old Nationwide BMR and took out a new fixed rate for the increase to fund the new house.

So I have 2 different mortgages with 2 different interest rates. The 5 year fix expires in March 2022 on 1.89% (£37K remaining) and the other one is just chugging away on the Nationwide BMR of 2.10% (£57K remaining).  Remaining term is 12 years and LTV is approx 28-30%.  I have been overpaying a bit on both mortgages (capped on the fixed rate but no cap on overpaying on the BMR one). The mortgages need to keep the same term.

My dilemma is - with interest rates being low should I move the Nationwide BMR onto a fix now , just leave it where it is and stay on the pre 2009 BMR, or wait until next year and merge both of the mortgages together - although I am aware that the interest rate situation might have changed significantly by then. I do have savings so could overpay a bit more, but was unsure about putting a chunk into one of these mortgages given the uncertainly about employment with COVID (the BMR has no cap on % to overpay) . I do have savings in ISAs which as we know have poor interest rates but with 2 young children and working in a fickle employment industry I do need to keep some idea for emergencies/possible further education.
Thanks for any feedback

@PieMistress On the plus side, your mortgage on BMR is relatively small so you can't go massively wrong with whatever you choose. I'm sure you are aware, because your mortgage is from 2009, it should come with a few features that aren't easily available nowadays, inc potentially the option to underpay or borrow-back any overpayments made. You will need to check with NW to be sure of whether you have this facility or not.

Is there any reason you are splitting your overpaument between the two? I would imagine that it may make more sense to overpay the BMR part because it's at a higher rate and potentially offers more flexibility with what you can do with the overpayment reserve.

Overall you will need to weigh up the benefits of the BMR product vs the interest saving if you fixed it to a current product to see what makes sense.

K_S

Afternoondelight91 said:

Hi guys
Thanks for setting up this thread.
I'm planning on moving house this year and I'm after some advice around early repayment on my current home. Apologies for my naivety. 

Assuming I have the financial flexibility to cover the remaining mortgage + any unforseen issues, what are the implications for the two scenarios:

Pay off my current house in full (inc early repayment charges), sell and then purchase new house using the 100% equity.

OR

Sell my current house, absorbing any equity. 

Purchase a new house with aforementioned equity and cash on hand. 

Grateful for any advice. 

@Afternoondelight91 Assuming the sale (of current house) and purchase (of new one) happen simultaneously, is there not the option to port your mortgage over so you can potentially avoid an ERC?

Afternoondelight91

K_S said:

Afternoondelight91 said:

Hi guys
Thanks for setting up this thread.
I'm planning on moving house this year and I'm after some advice around early repayment on my current home. Apologies for my naivety. 

Assuming I have the financial flexibility to cover the remaining mortgage + any unforseen issues, what are the implications for the two scenarios:

Pay off my current house in full (inc early repayment charges), sell and then purchase new house using the 100% equity.

OR

Sell my current house, absorbing any equity. 

Purchase a new house with aforementioned equity and cash on hand. 

Grateful for any advice. 

@Afternoondelight91 Assuming the sale (of current house) and purchase (of new one) happen simultaneously, is there not the option to port your mortgage over so you can potentially avoid an ERC?

I wasn't aware this was an option. So I can port the mortgage to the new property, even if I required additional credit? Assuming the new property is significantly more expensive. 

K_S

Afternoondelight91 said:

K_S said:

Afternoondelight91 said:

Hi guys
Thanks for setting up this thread.
I'm planning on moving house this year and I'm after some advice around early repayment on my current home. Apologies for my naivety. 

Assuming I have the financial flexibility to cover the remaining mortgage + any unforseen issues, what are the implications for the two scenarios:

Pay off my current house in full (inc early repayment charges), sell and then purchase new house using the 100% equity.

OR

Sell my current house, absorbing any equity. 

Purchase a new house with aforementioned equity and cash on hand. 

Grateful for any advice. 

@Afternoondelight91 Assuming the sale (of current house) and purchase (of new one) happen simultaneously, is there not the option to port your mortgage over so you can potentially avoid an ERC?

I wasn't aware this was an option. So I can port the mortgage to the new property, even if I required additional credit? Assuming the new property is significantly more expensive. 

@Afternoondelight91 Its not always available, depends on the features that your current product has. You can look up the mortgage offer document for the current mortgage or call the lender and check.

At its most basic, what happens is you port the existing mortgage over to the new property and the lender lends you the excess borrowing required to make the new purchase. You end up with two parts to your mortgage with the same lender.

LittleBrownHouse

Hi...created separate post, but no one seems to be knowing the answer. Trying my luck here: So I am asking if there is any benefit to capitalise my mortgage overpayment reserve when transferring to new product after fixed rate ends?
To illustrate here is my example - my fixed rate comes to end and I have overpayment reserve of 4k. I am going to move to another fixed term product and wonder if there is any benefit to capitalise my overpayment? Or should I leave it where it is? I am not intending to fall back on the reserve. I cannot find any information on this subject - all articles refer just to simple stuff like benefits of overpayments etc etc.. (Thank you)

IAMIAM

HSBC have updated all their rates recently with a May 2023 end date, does this mean all their rates will remain as is until say Easter time and they all get refreshed again for an July/Aug 2023 end date?
Also why do they only allow additional borrowing term up to 30 years, but main mortgage up to 35 years?

PieMistress

K_S said:

PieMistress said:

Hi, sorry I created a separate thread for this query then spotted this!  Wondering if anyone has any advice:

Hi, when I moved house 8 years ago I took over my Nationwide mortgage which was/is on the old Nationwide BMR and took out a new fixed rate for the increase to fund the new house.

So I have 2 different mortgages with 2 different interest rates. The 5 year fix expires in March 2022 on 1.89% (£37K remaining) and the other one is just chugging away on the Nationwide BMR of 2.10% (£57K remaining).  Remaining term is 12 years and LTV is approx 28-30%.  I have been overpaying a bit on both mortgages (capped on the fixed rate but no cap on overpaying on the BMR one). The mortgages need to keep the same term.

My dilemma is - with interest rates being low should I move the Nationwide BMR onto a fix now , just leave it where it is and stay on the pre 2009 BMR, or wait until next year and merge both of the mortgages together - although I am aware that the interest rate situation might have changed significantly by then. I do have savings so could overpay a bit more, but was unsure about putting a chunk into one of these mortgages given the uncertainly about employment with COVID (the BMR has no cap on % to overpay) . I do have savings in ISAs which as we know have poor interest rates but with 2 young children and working in a fickle employment industry I do need to keep some idea for emergencies/possible further education.
Thanks for any feedback

@PieMistress On the plus side, your mortgage on BMR is relatively small so you can't go massively wrong with whatever you choose. I'm sure you are aware, because your mortgage is from 2009, it should come with a few features that aren't easily available nowadays, inc potentially the option to underpay or borrow-back any overpayments made. You will need to check with NW to be sure of whether you have this facility or not.

Is there any reason you are splitting your overpaument between the two? I would imagine that it may make more sense to overpay the BMR part because it's at a higher rate and potentially offers more flexibility with what you can do with the overpayment reserve.

Overall you will need to weigh up the benefits of the BMR product vs the interest saving if you fixed it to a current product to see what makes sense.

Thanks so much!  I will be honest I cannot remember why I am overpaying more on the fix with the lower interest rate and I realise this makes no sense when it is written down.  I will contact NW and see what they say as I have just received my mortgage statement.  The ISA interest rate is so paltry that we need to take a proper look at what we feel comfortable with releasing and putting in the mortgage instead.

K_S

IAMIAM said:

HSBC have updated all their rates recently with a May 2023 end date, does this mean all their rates will remain as is until say Easter time and they all get refreshed again for an July/Aug 2023 end date?
Also why do they only allow additional borrowing term up to 30 years, but main mortgage up to 35 years?

@iamiam Rates can change or be pulled at any time.

Not sure about the answer re term, I guess it's just their policy, don't know what it's based on.