To go FA or not for mortgage renewal time.

MFWannabe

Personally if it was me and I had that long left on the term and wasn’t looking to move I’d go with the 10 year deal. I can’t see rates coming down below 4% for a very long time, but that is my opinion 
You don’t really need to go through au FA if you’re staying with current lender

B0bbyEwing

Yeah that's what I'm thinking. I've just been doing some number crunching on various comparisons to see if I'm missing out anywhere & it so far doesn't look like it.

U.Switch took the piddle though. Spent an age answering all their questions only for them to not give me any quotes at the end of it & wanting to arrange for someone to phone me. No thanks! 

As I've touched on in this thread, I don't really follow the economy, politics & the like so I don't really have anything to base this on but I just 'feel' I suppose would be the way I'd say it - that the rates aren't going to drop massively & certainly not to the 2%-3% we came in at. 

Had the discussion with my wife this evening & while it's crappy that we're looking at £500-£530 when we came in 10 yrs ago at £440 and then the past 5yrs being £390 with approx £24k paid off in that time .... at the end of the day it doesn't matter. The numbers are the numbers, we either accept them or we don't.

Just glad it's not like the 80s or whenever it was when the rates were in the teens.
Well, not like that yet at least.

MFWannabe

I think if you can get anything below 5% or even 6% now is a good deal tbh 

TheAble

Presumably it's not a huge balance you have outstanding?

B0bbyEwing

Ok so on page 1 it was said to secure a deal. 

I couldn't see how to do it when getting the quote with Nationwide so I've just got on the live chat with them thinking one of them would respond in the morning - poor sods are still at work as someone responded but said as I'm discussing moving to a new deal, I need to phone them.

To maybe save me a phone call in the morning, do any of you know HOW you secure in a deal, so that the new deal runs once the current deal properly ends, rather than the current deal ending early just to kick off the new (& dearer!) one??

TheAble said:

Presumably it's not a huge balance you have outstanding?

Sorry I thought i'd given full info. The figures I'm putting in to the comparison sites - 

Value: £214k
Mortgage: £78k (actually 77.2k as it stands today but as it's over 77 I just put 78k)
Duration: 20yrs left.

B0bbyEwing

Jeez, while I've been trying to get stuff in place to secure the deal & get questions answered (I don't mean just here with that one, I mean on the phone & live chat to them too), in a couple of days the rate has now changed. 5yr is £15 dearer, 10yr is £9 dearer p/m. 

Have just ran a calculator & if I reduce the term with my overpaying then I'll pay more per month than if I kept the term the same. 
Probably "of course" to you guys but having never done it/looked at it before, I thought reducing the term with an overpayment would just reduce the term, nothing more or less & my monthly payments would be the same as if I hadn't overpaid. 

So now need to decide whether to reduce the term with the overpayment (& end up paying more than I expected) or keep the term the same (& pay a bit less per month - £47 difference per month on the 10yr term). 

Altior

There is two schools of thought, and they are equally valid, it depends on your personal preference.

I prefer to view mortgage as rent, and want to have the longest term and smallest repayment possible. I see overpayments as sunk cost, and would rather invest/have access to that money now.

Others would like to overpay and reduce their liability to the bank as quickly as possible, to do so sacrificing utility now.

Part of my rationale is the time value of money, it erodes away with inflation and with the passing of time, repayments in real terms will become negligible. 

Overpayments reduce the capital balance. This means that you can either choose to maintain the term and have lower monthly repayments, or maintain the value of monthly repayments and shorten the term. For modest amounts of capital overpayments, this is really a negligible consideration. If your primary concern is being able to meet the mortgage payments in the future, it would be better to put that money aside. Short term cash bonds and cash ISAs are available in the region of 5-6% currently. For me this is better than locking it away in an illiquid asset. 

B0bbyEwing

Altior said:

There is two schools of thought, and they are equally valid, it depends on your personal preference.

I prefer to view mortgage as rent, and want to have the longest term and smallest repayment possible. I see overpayments as sunk cost, and would rather invest/have access to that money now.

Others would like to overpay and reduce their liability to the bank as quickly as possible, to do so sacrificing utility now.

Part of my rationale is the time value of money, it erodes away with inflation and with the passing of time, repayments in real terms will become negligible. 

Overpayments reduce the capital balance. This means that you can either choose to maintain the term and have lower monthly repayments, or maintain the value of monthly repayments and shorten the term. For modest amounts of capital overpayments, this is really a negligible consideration. If your primary concern is being able to meet the mortgage payments in the future, it would be better to put that money aside. Short term cash bonds and cash ISAs are available in the region of 5-6% currently. For me this is better than locking it away in an illiquid asset. 

This is one thought at the back of my mind.

Retirement ASAP is a goal. I have no set age in mind. When asked the question & I have to give an answer I say 65 because it's a) somewhere I think is realistic and b) what 'everyone's' retirement age generally was (yes I know plenty were before/after, that's why I said 'everyone's' and not everyone's). 

I don't particularly know whether I'm in a bad/ok/good position at age 40. When you hop on online calculators I'm in a terrible position because they seem to say you need like a million quid to get by (exaggeration (slight) to make a point).

I'm surprised I've not had the "why haven't you done it yet" (overpayment, not securing) which tends to come quickly but that's one reason I'm hesitant to pull the trigger.

I have a post to stick in the MA thread & then hopefully when I get home from work it'll be answered. Then I need to at least secure a deal. Knowing my luck I'll lock in at a high & then the following week it'll start dropping.

Altior

There are two different points on the horizon for me, one is financial security and the other is retirement. They aren't necessarily correlated. I'm quite lucky that my job is pressing buttons on a computer, so technically it's only really about timing access to pension funds.

Retirement calculators are weak for me as they don't really nuance the life cycle. If we are lucky enough to get to age 80+, we wont be spending much on optional items at all. It's more about working out the likely spending needs and then targeting that, than targeting an amount and working back. What will monthly bills be, how much discretionary spending, and what kind of buffer would be desirable (in today's money, then factor inflation). 

What nobody knows is how State pensions will look into the decades to come, if they will exist at all, be means tested etc. As someone who does monitor financial affairs closely, I feel like the State pension in current form is extremely vulnerable. I'm not factoring it into my planning, and if I do get it, will be a bonus

B0bbyEwing

Altior said:

There are two different points on the horizon for me, one is financial security and the other is retirement. They aren't necessarily correlated. I'm quite lucky that my job is pressing buttons on a computer, so technically it's only really about timing access to pension funds.

Retirement calculators are weak for me as they don't really nuance the life cycle. If we are lucky enough to get to age 80+, we wont be spending much on optional items at all. It's more about working out the likely spending needs and then targeting that, than targeting an amount and working back. What will monthly bills be, how much discretionary spending, and what kind of buffer would be desirable (in today's money, then factor inflation). 

What nobody knows is how State pensions will look into the decades to come, if they will exist at all, be means tested etc. As someone who does monitor financial affairs closely, I feel like the State pension in current form is extremely vulnerable. I'm not factoring it into my planning, and if I do get it, will be a bonus

Thanks for your response. 

I like to bounce my thoughts off of others because they generally have a different way of viewing an issue which after giving me their response makes things seem clearer, even if just a little. Your responses have done that so thanks. 

Regards the state pension we're in the same boat with our outlook. I try not to rely on others & as such I only factor in my own money - my SIPP, my LISA & my workplace pension. 
The state pension as you say - if it exists in 25-30yrs time, will be a nice bonus, but I work as though it won't be there.