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Thoughts on our mortgage options
Bluebell1000
Posts: 1,129 Forumite
Our fixed rate expires on 1st Dec (Natwest). At that point we're likely to be within £5-10k off fully repaying it (that would take us a further 3-6 months to clear). I just wanted to run my thoughts past you all about what to do.
1. Take a new 2 year fix (assuming we'd need to take £25k minimum). Pay off the remaining balance at the end of the fixed term. We'd have access to more cash in the meantime in case we need it, but possibly higher cost, with 2 years of interest on a higher amount, and making mortgage payments for a longer time.
2. Go onto SVR and get it cleared ASAP. Higher interest in short term, but probably saving in longer term, and possibly able to increase my pension payments sooner when we don't have a fixed outgoing of the mortgage.
3. Offset mortgage. We used to have one with First Direct but didn't meet their criteria last time I looked. Probably higher interest (&fee?) compared to a fixed rate in the short term, but possibly able to get to fully offset slightly quicker. Likely to mean the hassle of switching current accounts, but access to larger amount of emergency cash if needed. Would be increasing pension contributions when fully offset
Are there any alternatives I might have missed, and do you have any pointers about what else I should take into account when deciding? Or thoughts about what you might do in this situation? I know it's a little early to look at available rates, which might help.
1. Take a new 2 year fix (assuming we'd need to take £25k minimum). Pay off the remaining balance at the end of the fixed term. We'd have access to more cash in the meantime in case we need it, but possibly higher cost, with 2 years of interest on a higher amount, and making mortgage payments for a longer time.
2. Go onto SVR and get it cleared ASAP. Higher interest in short term, but probably saving in longer term, and possibly able to increase my pension payments sooner when we don't have a fixed outgoing of the mortgage.
3. Offset mortgage. We used to have one with First Direct but didn't meet their criteria last time I looked. Probably higher interest (&fee?) compared to a fixed rate in the short term, but possibly able to get to fully offset slightly quicker. Likely to mean the hassle of switching current accounts, but access to larger amount of emergency cash if needed. Would be increasing pension contributions when fully offset
Are there any alternatives I might have missed, and do you have any pointers about what else I should take into account when deciding? Or thoughts about what you might do in this situation? I know it's a little early to look at available rates, which might help.
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Comments
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@bluebell1000 Personally, given the size of the outstanding amount, I would just fall on to SVR (currently 4%-ish for NatWest) and pay it off as quickly as possible.
If you crunch all the numbers, the above might not be most moneysaving route to take. That might be upping the mortgage to the minimum required (20k or 25k) to get you a no-fee no-ERC discount/tracker product and then overpay and pay off the mortgage asap.I am a Mortgage Adviser - You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
PLEASE DO NOT SEND PMs asking for one-to-one-advice, or representation.
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Personally, with such a small amount will not remortgage again.
product fee, interest rate increase etc.
Pay it off as soon as you can.
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Thanks, I will look at no fee no ERC rates at the end of this month as well then!0
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To follow up on this, we ended up taking out a 0% on purchases credit card and put our standard spending on there to free up cash.... And so our mortgage was paid off in full yesterday on the day our fixed rate ended 🥳
We will have over a year to clear the card before we have to pay any interest, which was definitely the cheapest option in the end.6 -
Thanks for reporting back. Brilliant end to the story, great thinking.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.2
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You did brilliant there1
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definitely a 0% credit card nothing to loose at all get it for as long as you can and repay the balance over that time.0
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