5 Yr Mortgage Comming to an end

mazibee
mazibee Posts: 417
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edited 10 February at 7:57PM in Mortgages & endowments
Dear All Seniors/ Experienced members,

Please I need some help

Me and my wife bought a house worth 350K in July 2019, deposit was £60K and mortgage £290K 25 years, joint mortgage.
5 Years Fixed, Product end date June 2024, Interest Rate 2.14%

Due to Covid 19 uncertainity I applied for the three months payment holiday, in case things go wrong.


Mortage Balance as of today is £251918.34
M0nthly Payment is £1270.06
Remaining Over Payment Allowance for this year  = 25105
Remaing Term 20 Years 4 Months
Home Equity  = 179378.66
Mortgagae Bal = 251918.34
LTV  = 58.41%

When Logging in  my mortgage account I am seeing these deals

5 Year Fixed 3.89%  £999 Product Fee Upfront, Monthy Payment 1491.63
5 Year Fixed 4.14%  £0   Product Fee Upfront, Monthy Payment 1524.97
7 Year Fixed 4.14%  £0   Product Fee Upfront, Monthly Payment 1524.97
2 Year Fixed 4.44%  £999 Product Fee Upfront, Monthly Payment 1565.53
1 Year Fixed 5.37%  £499 Product Fee Upfront, Monthly Payment 1694.98


SVR          7.50% £0   Product Fee Upfront Monthly Payment 2011.61


If I will not opt for any option above, I will be shifted to the SVR and that will be additional  £741.55 per month.

Any suggestions will be extremely appreciated as I have never bbeen through this remortgage process

--What should be the plan as there is so much uncertaninty on the interet rates, If I fix for 5 Years and the rates start coming down?

--Shall I overpay £20,000 before remortgaing and bringing the LTV to 53.77%, Will it make any impact on the offers I can see in my online account?

--If I overpay shall I opt to reduce the monthky installment or the term?

--Shall I continue with the existing lender (Santander) or search and check with other lenders also?

Thanks in advance.






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Comments

  • grumbler
    grumbler Posts: 58,629
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    edited 10 February at 6:11PM
    mazibee said:
    ...
    Me and my wife bought a house worth 350K last year, deposit was £60K and mortgage £290K 25 years, joint mortgage.
    5 Years Fixed, Product end date June 2024, Interest Rate 2.14%...




    If it's 5 years, how come it's coming to an end in one year?
  • mazibee
    mazibee Posts: 417
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    grumbler said:
    mazibee said:
    ...
    Me and my wife bought a house worth 350K last year, deposit was £60K and mortgage £290K 25 years, joint mortgage.
    5 Years Fixed, Product end date June 2024, Interest Rate 2.14%...




    If it's 5 years, how come it's coming to an end in one year?
    Sorry for the confusion,
    it’s was July 2019, mortgage is ending in June 2024 ( 5years)
  • Hoenir
    Hoenir Posts: 1,299
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    Remortagaging is when you switch to another lender. Not remain with your existing when a fixed term products comes to the end of it's term. 

    Unless you can earn a higher rate of return on your savings then overpaying the mortgage makes sense. 

    Do shop around to see what other lenders are offering. 

    The product you ultimately chose is yours to make. If you prefer the security of knowing what your monthly outgoings are. Another 5 year fixed term product is a reasonable choice. Attempting to second guess future interest rate movements is nigh impossible. The best course of action is to make further overpayments as and when you are able to. Becoming mortgage free earlier is well worth aspiring too. 
  • grumbler
    grumbler Posts: 58,629
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    edited 11 February at 12:44AM
    mazibee said:
    ...

    Mortage Balance as of today is £251918.34
    ...

    When Logging in  my mortgage account I am seeing these deals

    5 Year Fixed 3.89%  £999 Product Fee Upfront, Monthy Payment 1491.63
    5 Year Fixed 4.14%  £0   Product Fee Upfront, Monthy Payment 1524.97
    Do your maths - ignore the misleading monthly payments and calculate the interest instead.
    The difference in rates is 0.25%
    £250K*0.25% = £625 (p.a)
    £625*5(years) = £3K

    This calculation is approximate, but for me the choice between these two options is obvious.
  • Cariad71
    Cariad71 Posts: 251
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    Paying the £20k won’t affect the offers as the LTV won’t shift much but obviously your monthly payments will reduce. The £20k will earn you more interest in the bank than what your mortgage interest rate costs you. 

    Shop around for best rates and remortgage if the overall plan is better (monthly interest plus fees).

    Fixing or getting a tracker is dependent on how risk averse you are. Would you rather know exactly what monthly costs will be or are you happy to chance them going up or down?




    Starting balance £173,000 (Sept 2012) interest only so if we do nothing We will owe this at the end of the term😁😁
    Balance as of Sept 2014 £165,803
    Balance as of Feb 2015 £163,360
    Balance end of July 2015 £159,050
    Balance as of Jan 2017.... £138,033:j
  • mazibee
    mazibee Posts: 417
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    grumbler said:
    mazibee said:
    ...

    Mortage Balance as of today is £251918.34
    ...

    When Logging in  my mortgage account I am seeing these deals

    5 Year Fixed 3.89%  £999 Product Fee Upfront, Monthy Payment 1491.63
    5 Year Fixed 4.14%  £0   Product Fee Upfront, Monthy Payment 1524.97
    Do your maths - ignore the misleading monthly payments and calculate the interest instead.
    The difference in rates is 0.25%
    £250K*0.25% = £625 (p.a)
    £625*5(years) = £3K

    This calculation is approximate, but for me the choice between these two options is obvious.
    Thanks for your reply.

    I means that , if I opt for 5 year fix at 3.89% with the product fee if £999
    the monthly instalment will be less and at the same time even after paying the product fee I will be paying £3K less in interest (approx £2000 saving  ie £3000 less £999,) as compared to when I opt for 5 yr fix at 4.14% with no product fee.
  • mazibee
    mazibee Posts: 417
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    Hoenir said:
    Remortagaging is when you switch to another lender. Not remain with your existing when a fixed term products comes to the end of it's term. 

    Unless you can earn a higher rate of return on your savings then overpaying the mortgage makes sense. 
    Thanks for your reply,
    if one continues  with the same lender what is this option called?

    Please can you explain a bit
    Unless you can earn a higher rate of return on your savings, then overlaying the mortgage.
     Sorry for asking these simple questions.
  • Hoenir
    Hoenir Posts: 1,299
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    Ask as many simple questions as you like. That's the whole point of the forum. 

    A "mortgage" is in essence a loan like any other. The term mortgage comes from the name of the legal charge placed on the property to secure the debt. Hence remortgage is when you move lenders and the charge has to be reassigned. 

    Staying with your existing lender is simply a product transfer. The repayment date of the mortgage being set when the monies where originally advanced. 

    If you can earn 5% tax free in with money deposited in an ISA, or you don't pay tax on your savings,  and your mortgage rate is 4%. Then saving the money makes better sence than overpaying the mortgage. 

    If the situation is the other way round. The mortgage is 5% and the savings interest rate is 4%  , or after the tax rate is 4%. Then overpaying the mortgage is the better option. 

    Overpaying does provide a discipline. As the money is inaccessible. Finding ways to cut out unneccesar expenditure and channel it into overpaying the mortgage can become addictive. Like rolling a snow ball. Starts very small over time the benefits will mount up. 
  • grumbler
    grumbler Posts: 58,629
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    mazibee said:
    grumbler said:
    mazibee said:
    ...

    Mortage Balance as of today is £251918.34
    ...

    When Logging in  my mortgage account I am seeing these deals

    5 Year Fixed 3.89%  £999 Product Fee Upfront, Monthy Payment 1491.63
    5 Year Fixed 4.14%  £0   Product Fee Upfront, Monthy Payment 1524.97
    Do your maths - ignore the misleading monthly payments and calculate the interest instead.
    The difference in rates is 0.25%
    £250K*0.25% = £625 (p.a)
    £625*5(years) = £3K

    This calculation is approximate, but for me the choice between these two options is obvious.


    I means that , if I opt for 5 year fix at 3.89% with the product fee if £999
    the monthly instalment will be less and at the same time even after paying the product fee I will be paying £3K less in interest (approx £2000 saving  ie £3000 less £999,) as compared to when I opt for 5 yr fix at 4.14% with no product fee.
    Yes, with 4.14% you pay over 5years about £3K more in interest than with 3.89%. £3K is much more than £999 fee you pay to get lower interest rate (3.89%).
    That's why it's obvious to me that 3.89% with £999 fee is better than 4.14% without fee.

  • mazibee
    mazibee Posts: 417
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    Thanks

    Any suggestion on which new lenders to contact who will be offering some competitive rates better than 3.89% for 5 Year Fix?

    Also are there plus points on stayiong with the existing lender?

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