Overpayments, remortgaging, maternity leave

jeaniemsm

Hi folks,

I have a question I hope someone could help advise.

We currently have a hefty (London) mortgage, if house price is the same as we paid, as of right now we will have just over 30% equity.
Mortgage term ends Jan 2026, current fixed rate of 1.79%.
Looking to make irregular overpayments, in the hopes of getting to the 60% LTV when we remortgage.

My question is, is it better to make monthly overpayment or one massive overpayment each year in terms of saving interest?

One thing that's also niggling me is that we are looking to start a family too.
Husband is on a high salary as am I, if I was to go on maternity leave, the mortgage outstanding will be approx 4.7 x my husband's salary (with me it's currently 3 X joint salary), but we will still have about 40% of his monthly salary after mortgage, bills and food.

Will this affect anything when it comes to remortgaging, i.e will our house be deemed unaffordable to us on one salary? All the more reason to overpay now?

MFWannabe

Play around with the overpayment calculator from this website 
usually better to make overpayments monthly, however you would get more interest on your money in a savings account, so if you’re good with money you could put the overpayment into a higher interest savings account and then pay a lump sum in 12 months time 
Ref remortgage when the time comes, if you stay with same lender there are no new credit checks if you’re not adding to borrowing 

Ganga

Can you not put off starting a family for a year or two and pay off the mortgage as much as you can if both high earners so that when kids come along you are both comfortable financially .

Clueless56

Are you expecting to earn nothing during maternity leave?  My 'children' are in their late 20s/early 30s now, but even back then one often received some pay over and above statutory mat. pay while on maternity leave, though sometimes repayable - at least in part - if one didn't return to the job afterwards.  I'd definitely recommend looking into your organisation's maternity pay arrangements as part of your research.

jeaniemsm

Ganga said:

Can you not put off starting a family for a year or two and pay off the mortgage as much as you can if both high earners so that when kids come along you are both comfortable financially .

Would love to be able to put off kids, but in my mid 30s now, financially we're good, and we do save a big chunk each month for a loft conversion planned for the next 5+ yes, so right now we do have some cash saved up

dimbo61

Some times things need to happen 😕 
We have No idea of your age or health and kids may take time to arrive !
Maybe save any excess  money into regular savers which pay more than 1.79% for the next few months and year and see how the LTV is nearer Jan 2026.
Well done on getting 1.79% fixed for 5 years ?

jeaniemsm

Clueless56 said:

Are you expecting to earn nothing during maternity leave?  My 'children' are in their late 20s/early 30s now, but even back then one often received some pay over and above statutory mat. pay while on maternity leave, though sometimes repayable - at least in part - if one didn't return to the job afterwards.  I'd definitely recommend looking into your organisation's maternity pay arrangements as part of your research.

Unfortunately my company offer statutory maternity pay, not entirely sure how much that is (£150/ week?).

jeaniemsm

MFWannabe said:

Play around with the overpayment calculator from this website 
usually better to make overpayments monthly, however you would get more interest on your money in a savings account, so if you’re good with money you could put the overpayment into a higher interest savings account and then pay a lump sum in 12 months time 
Ref remortgage when the time comes, if you stay with same lender there are no new credit checks if you’re not adding to borrowing 

Thanks, that's good to know.
I think I might be overthinking on overpayments and might just make sense if I just make random over payments each month (whether that be £50 or £500).
We are saving about 25% of our joint income each month.

Currently with Santander and would be happy to stay with them, but when remortgaging comes up, would we need to notify them that our situation has (may have) changed if I'm on maternity leave?
When we have kids, I am looking to go back to work but on a part time basis so my salary will be considerably lower

jeaniemsm

dimbo61 said:

Some times things need to happen 😕 
We have No idea of your age or health and kids may take time to arrive !
Maybe save any excess  money into regular savers which pay more than 1.79% for the next few months and year and see how the LTV is nearer Jan 2026.
Well done on getting 1.79% fixed for 5 years ?

Exactly nothing ever goes to plan!
Have been saving big chucks of cash for the last 2 years (for emergency fund and a loft conversion)
Managed to get the 1.79% rate back in early 2021, thank God.

MFWannabe

jeaniemsm said:

MFWannabe said:

Play around with the overpayment calculator from this website 
usually better to make overpayments monthly, however you would get more interest on your money in a savings account, so if you’re good with money you could put the overpayment into a higher interest savings account and then pay a lump sum in 12 months time 
Ref remortgage when the time comes, if you stay with same lender there are no new credit checks if you’re not adding to borrowing 

Thanks, that's good to know.
I think I might be overthinking on overpayments and might just make sense if I just make random over payments each month (whether that be £50 or £500).
We are saving about 25% of our joint income each month.

Currently with Santander and would be happy to stay with them, but when remortgaging comes up, would we need to notify them that our situation has (may have) changed if I'm on maternity leave?
When we have kids, I am looking to go back to work but on a part time basis so my salary will be considerably lower

 Nope you don’t need to tell them any change of circumstances, that’s only if you do a remortgage with another provider. 

Stay with the same provider, Santander you would just choose a different product, so a product transfer and not a remortgage or you go on to their variable rate at that time 

Yawn

Three quick points:

1) even when you remortgage elsewhere, they are not allowed to ask you whether you are pregnant, etc. as that would be discrimination (only if you think your circumstances might change, and pregnancies could also be unforeseen)
2) you have quite a long time horizon, so I don't understand your concerns about maternity leave; you have quite a bit of time to have a child, take leave, and return to work (if that's what you're planning). In any case if you stay with the same provider, there won't be any checks. I temporarily had little income before I remortgaged with the same bank and it was totally fine.
3) given that interest rates on savings are much higher than your interest rate, it's better to save than pay off your mortgage. You can do so penalty free when your fixed term ends. Regular savers are a very good idea.