Paying off more of mortgage while on SVR (planninv to look at moving house soon!)

Aranya

Hi all! We are coming to the end of our 3 year fixed rate mortgage at the end of the year and are in the early stages looking at places to move. We have been overpaying on the mortgage too. I wonder if we should move onto the SVR once the fixed is over (pay off more of the mortgage as no limits on SVR but this reduces house deposit) and then secure another fixed rate for a year (as intend on moving)

csgohan4

What ever you do, do not remortgage with a different lender and complete so soon, it will only cause you stress and grief like it did to this poster

https://forums.moneysavingexpert.com/discussion/6299636/failure-to-complete/p1

Being on SVR gives you flexibility, but if you go fixed, know the limitations it may give you such as ERC/ LR needing time to update

MrsBrush

If you decide to re-mortgage, as stated above, do it way in advance of when you intend to move!! We had a similar conundrum last year, knowing we intended to move this year. Our previous 5 year fixed rate was due to finish in December 2020, so the debate was exactly like yours - from a fix of around 2.5% to SVR (ouch!) and we had also been overpaying. In the end we stayed with the same lender on a new 5 year fix, slightly more more expensive than some at 1.5% because of contract working, and completed on the re-mortgage a month before the old one was due to end. It was the same lender so no ERP and no LR issues.

Then when we were ready to start looking for a new house in April 21, our agreement in principle was simple as it was just to port to a new property, and we got the new mortgage offer through within 5 days of the valuation. We haven't exchanged on our sale and purchase yet, so we would have had 10-11 months on standard variable - which would have meant no overpayments for that whole time. Worked for us at least!

I would also always advise you find a decent mortgage broker who can advise on the whole of market, and find you a new deal that you can port when you are ready.

Thrugelmir

What is your lenders SVR?  Might be an expensive option to chose. Rather than selecting a new product and porting the existing mortgage when you finally move. 

getmore4less

If selling and buying overpayment make no difference to the amount available to put down on the next one

TripleH

We remortgaged with the same lender when our fixed term came to am end (we were actively selling). We found the best deal we could which had no early redemption penalties. It wasn't the cheapest rate but we saved when we did complete our sale 7 months later.

getmore4less

Which lender they may have suitable no ERC options.
Not all lenders have 1y options

TripleH

Apologies, our lender was HSBC.

Also it wasn't a 1 year. I think it was a 3 years fixed rate but with no redemption penalties for early redemption.

rexmedorum

Aranya said:

Hi all! We are coming to the end of our 3 year fixed rate mortgage at the end of the year and are in the early stages looking at places to move. We have been overpaying on the mortgage too. I wonder if we should move onto the SVR once the fixed is over (pay off more of the mortgage as no limits on SVR but this reduces house deposit) and then secure another fixed rate for a year (as intend on moving)

All depends how much you've got left. If the amount left is fairly small:
- fees outweigh a higher interest rate on SVR
- you'd be limted to overpaying 10% of a ever decreasing sum if remortgaging

However if it's much larger a new deal can save serious money.

Also: why would you have less money for a deposit if you used money to pay off the mortgage instead of savng? Your deposit would be the equity in the current house surely? Unless you're not planning to sell.

getmore4less

rexmedorum said:

Aranya said:

Hi all! We are coming to the end of our 3 year fixed rate mortgage at the end of the year and are in the early stages looking at places to move. We have been overpaying on the mortgage too. I wonder if we should move onto the SVR once the fixed is over (pay off more of the mortgage as no limits on SVR but this reduces house deposit) and then secure another fixed rate for a year (as intend on moving)

All depends how much you've got left. If the amount left is fairly small:
- fees outweigh a higher interest rate on SVR
- you'd be limted to overpaying 10% of a ever decreasing sum if remortgaging

However if it's much larger a new deal can save serious money.

Also: why would you have less money for a deposit if you used money to pay off the mortgage instead of savng? Your deposit would be the equity in the current house surely? Unless you're not planning to sell.

For small amounts you just take a no fee option.

rexmedorum

getmore4less said:

rexmedorum said:

Aranya said:

Hi all! We are coming to the end of our 3 year fixed rate mortgage at the end of the year and are in the early stages looking at places to move. We have been overpaying on the mortgage too. I wonder if we should move onto the SVR once the fixed is over (pay off more of the mortgage as no limits on SVR but this reduces house deposit) and then secure another fixed rate for a year (as intend on moving)

All depends how much you've got left. If the amount left is fairly small:
- fees outweigh a higher interest rate on SVR
- you'd be limted to overpaying 10% of a ever decreasing sum if remortgaging

However if it's much larger a new deal can save serious money.

Also: why would you have less money for a deposit if you used money to pay off the mortgage instead of savng? Your deposit would be the equity in the current house surely? Unless you're not planning to sell.

For small amounts you just take a no fee option.

Sure but you'd severly restrict how much you could overpay (uaully only 10%)