Overpay and remortgage or keep the low rate?

pferry15

Appreciate its difficult to answer but looking for advice on whether to overpay my mortgage or wait. 

Currently on a rate of 1.14%, monthly payment £751, got 9 months left of a two year fix, with a further 15 years to go to complete my mortgage. Current balance is £130,557, house is worth roughly £385,000, original value was £310,000. 

Been lucky enough to have been able to overpayment my mortgage for the first couple of years until my salary dropped to the point I couldn’t comfortably overpay, however, now I’ve suddenly come in to £100,000 and now have to decide whether to:

1-  switch early, pay the £100k towards the mortgage, along with the ERC of £789, and start a new 5/10yr fixed deal at around 5%

2- pay my permitted overpayment of £29,100 and continue to pay my £751 monthly payment until next year then remortgage and hope the rates haven’t increased too much (doubt they will come down) 

With my current deal ending in less than 12 months I can’t lock in the money in to a “high” interest fixed account. 

Does it make more sense to pay the mortgage at 1.14% for as long as possible then over pay, or overpay but then start a new mortgage at a much higher rate but much lower balance?

Any advice/opinions greatly appreciated. 

jrawle

I would save the £100k for the 9 months in accounts earning more than 1.14%, which should be easy. Best to split between two accounts to be under the FSCS limit. You should earn a significant chunk of interest doing that.

After 9 months, see what mortgage rates are available. You may still beat the new mortgage rate with savings, but if not, use the £100k to pay off most of the mortgage. Even if the new rate is sky high, it matters little when you will owe under £30,000. You will presumably be able to pay off the remaining balance in a few years anyway.

housebuyer143

3. None of the above. 

I would save it in a high interest savings account until your current deal comes to an end and then make a large overpayment. I would definitely not be doing one or two at the stage.

julicorn

I'd put the money into savings (I'd split it into 2 for the FSCS protection), there are easy access accounts around paying 3% and 6 months notice / fix accounts paying around 3.5%. 
Some lenders also let you lock in a rate up to 6 months before remortgaging, so I'd speak with a mortgage advisor in a few months time to see what's around then. If rates go up after that, no problem, you have your agreement, and if rates go down then you can always go for a different product. 

FashionHeart

I'm in the same situation, but I'd rather wait to remortgage as IMHO it wouldn't make a difference due to uncertainty of interest rates going either up or down in a couple of years.

pferry15

Thanks for the comments. I’ve worked out the interest I’d accrue next year would probably be around £1100 from Jan til September so if I put the £100k in to some forms of savings accounts and make more than that then that course of action would be the most sensible. 

Cheers everyone.