What do you think is best to do?

Sncjw

Our fixed rate with nationwide is coming to an end and we have 58k remaining on mortage with of 48 percent due to house valuation going up. 

We are not looking to move at all but want the best for us. I have locked in a 5 year fixed rate deal for £448 a month which will be only £50 extra to whay we are paying now. I am able to change it up till 20th April. 

We are planning to over pay massively once our credit cards are paid off in August. We hope to pay the house off in 2.5 years from August so hopefully mortage free by Feb 2028. 

We picked the 5 year fixed deal so thay we know how much we need to pay each month for 5 years just in case our plans for overpayment go out the window in case we need to money for other things. 

I am aware of tbe bank of England announcing g new interest rates but I have been keeping eye on the rates from nationwide. So the cheapest deal is currently the 5 year fix and even if we overpay and pay the early repayment charge we would still he saving thousands. Currently the exit fee and early repayment charge is only £570.

If i picked fhe 3 year fixed deal it is £3 more a month but jt would also mean i could drag out the last 6 months and not pay a early repayment charge. However if life gets in the way I may not be able to do that and having 5 year fix would give us more leeway. 

What would you do? 

Hoenir

Take a 5 year fix and overpay. This will give you flexibility. You've still the option to change the new product yet. Should rates fall. 

On-the-coast

I’d do the same as @Hoenir - same reasons

amnblog

You may well be going in the wrong direction here.

If you fully expect to repay your mortgage in full in 2.5 years that is 40% of today's balance repaid each year. We do not know how long your contractual mortgage term is, but is seems probable that you may look to overpay more than the allowed 10% of your balance each year.

On a Nationwide five year fix, overpayments above 10% of your balance will incur a fee as high as 5% and no lower than 3% during that 2.5 year period.

A three or two year fix, or a tracker may be more suitable.

Get some advice.

grumpy_codger

Things can change in the next years, but currently, with 10% overpayment restriction, you can easily "overpay" into a cash ISA and even be better-off as a result.

Sncjw

amnblog said:

You may well be going in the wrong direction here.

If you fully expect to repay your mortgage in full in 2.5 years that is 40% of today's balance repaid each year. We do not know how long your contractual mortgage term is, but is seems probable that you may look to overpay more than the allowed 10% of your balance each year.

On a Nationwide five year fix, overpayments above 10% of your balance will incur a fee as high as 5% and no lower than 3% during that 2.5 year period.

A three or two year fix, or a tracker may be more suitable.

Get some advice.

I'm going to overoay to the limit and then put money aside in a savings account so thay when we are close to the amount we gave insavings we can just hand it over. 

If we start in August we can go to the limit by April and then it resets again. 

BikingBud

Early Resettlement Charges are what they say on the tin.

You pay off early, you pay the charge but they might be a reasonable solution in assessing the overall costs.

You pay the charge but you don't pay all the interest, it recompenses the lender for that loss of interest.

You might also find that by going for a fixed rate for a period but without any arrangement fee that you end up paying less in total.

You need to consider all costs and then review your options. Rough and ready:

• £58000 - (448*12)  = 52,624 -(52624*.1)= £47362
• £47362 - (448*12) = £41,986.00-(41986*.1) =£37,787.40 

So after 2 years and paying off 10% max per year you should have £37787 to clear.

3 years left might incur 3% ERC so perhaps £1133 to pay.

Offset this against interest saved over next 3 years payments and interest gained from saving the spare cash over the 10% limit. Depending upon your interest rate it might be better to put the £5262 and £4198 into the best savings interest accounts you can find.

As has been mentioned though some factors are just not quantifiable in cash terms.

Sncjw

The erc as of now is only 570 quid. 

When we paid up to the limit we will put tbe moneh into savings account so thsy when the mortsge is close yo the savings amount we can go hear you go. 

Also I can over pay 10 percent of tbe original loan amount.