Mortgage Term and Overpayments. 19 May 2022 at 9:58AM in Mortgage-free wannabe 3 replies 102 views

Anongian

Hi everyone first time poster,

I am here to discuss my mortgage journey so far and propose my plan going forward and see what you think.

So I got a 25 year mortgage in 2018 have just hit the 4 year anniversary, due to my over payments however I have actually paid up 9 years of my mortgage so far and my remaining term is 16 years as of 18/05/22.

This wasn't easy to achieve as I only have my single wage so, I stacked the odds in my favour wherever I could.
I picked a smaller underbudget house, paid a 10% deposit instead of 5, I have 0 debts, manage my money meticulously and overpay prolifically when I can.

I live a humble life, no holidays, I don't drink or smoke so no big expenses at all really and I am content with my life (don't worry I am fine I am just a huge introvert).
My big love is tech mostly gaming specifically, just so you know I am not living like a squatter 😅

I am hoping be mortgage free in the next 10 years, it is a tough target but I want to be mortgage free by 40.

So now to the future plans bit I mentioned.

My 5 year fix isn't due to end until next year but I can re-fix now for a 1% fee. 
I think I am going to refix early the interest rate is currently 0.5% less than mine and I am worried about what it might be this time next year I don't want to come out of my mortgage to 5% rates end up paying more per month thus reducing my ability to overpay.
I mean the base rate has gone up by 0.75% this year already and the rate of inflation is now at 9% I feel like I have reasoned this out but it still seems like a bit of a kneejerk reaction. 
I know it is all guesswork educated or otherwise but I would be thrilled to have the opinions of other people in similar positions.

What do you guys think 🤔 

P.s sorry for the formatting it was done on a mobile 😅

powerspowers

Your reasoning seems sound to me! 

One way to check would be work out different payment estimates based on different interest rates using a mortgage calculator, then compare against the early repayment charge (1%). This should give you an idea of when you “break even” but from there is a guess as to whether rates will rise that much in a year. Hope that makes sense!

Good luck with your mortgage free journey, it sounds like are doing really well! Have you thought about pension provision and emergency fund as part of your overall planning? 

South_coast

Agreed, it definitely seems to make sense to fix again now if it's going to save you money overall

draiggoch

Is the new offer for 5 years as well? If so I would definitely go for it as it provides you with certainty.