Barclays Mortgage Dilemma

Dupont

Hello, I am looking for advice on my current mortgage. Preferably towards paying it off early.

I have a fixed rate mortgage with Barclays that is due to expire in November this year. My current interest rate is 2.29% and it then changes to BEBR +3.49%. I owe 128,000 and have 9 years and 11 months left. My current payment is £1204 a month which is obviously going to rise in November.

I have approximately £77,000 in savings and am wondering whether it would benefit me to just use all of that as a lump sum towards getting the mortgage paid early or whether to ask Barclays for a new deal where the savings are used or just going with another lender?

I find it all confusing.

Grateful for any advice.

Brie

How much interest are you getting on your savings? Assuming the BEBR of 4.25% doesn't change you'll be charged interest at 7.74%. If your savings interest is lower than that you should use all or a big chunk of it to overpay the mortgage.

Say your savings are currently getting 3% and you decide to use £50k to pay towards the mortgage. A rough calculation of savings in the first year would be (7.74%-3%)x£50k. So using your savings would mean you'd have about £2370 less interest charged in the first year. That's nearly £200 a month. Use £75k of saving to the mortgage would mean about £3500 a year less interest charged.

Using £75k to reduce the mortgage at renewal time might mean you get a preferential rate. There's nothing stopping you from asking Barclays what rate they will renew at on this basis and then comparing that to what a different bank might offer.

la531983

https://forums.moneysavingexpert.com/discussion/comment/81866629#Comment_81866629

Barclays only offer products at LTV 60% and below for renewing customers.

Barclays will only offer rates 90 days before rate end so that would be the start of September in this case.

Dupont

https://forums.moneysavingexpert.com/discussion/comment/81866629#Comment_81866629

My savings are getting 3.8% currently.

I don't mind using all of the savings to bring the 9 years and 11 months left on the mortgage down though.

Brie

I don't mind using all of the savings to bring the 9 years and 11 months left on the mortgage down though.

again rough calculation but if the interest rate is 7.74% and your monthly payments remain at £1204 and you dump the whole £77k on the mortgage then I can see you paying it all off in 4 years from now.

And in those 4 years you'd pay about £8700 in interest. Obviously if you don't use your savings against your interest your monthly payments would go up. I'm guessing about £1545 to pay off in 9y,11m but in the first 4 years you'd pay nearly £35k interest.

note - very rough calculations!!!

Dupont

https://forums.moneysavingexpert.com/discussion/comment/81866685#Comment_81866685

Does this mean I can't apply to Barclays for a new deal until then?

My property is worth approximately 270,000 and in September I would owe approximately £120,,000 on it minus my £75,000 savings if I went that route.

la531983

https://forums.moneysavingexpert.com/discussion/comment/81866729#Comment_81866729

Why would you want to, its going to be over a percent increase as it stands.

Dupont

https://forums.moneysavingexpert.com/discussion/comment/81866725#Comment_81866725

To be mortgage free in 4 years sounds nice. 😁

Dupont

https://forums.moneysavingexpert.com/discussion/comment/81866839#Comment_81866839

My fixed rate comes to an end in November. I go from 2.29% to BEBR + 3.49%.

la531983

https://forums.moneysavingexpert.com/discussion/comment/81866919#Comment_81866919

I know that. Thats months away. They will offer you rates in the app (or on the phone, or in a branch) a whole 90 days before the 30th November. Surely that gives you enough time to sort it?

Not sure why you would want to move off your current rate sooner when you are looking at an increase of at least one percentage point based on what you are paying now compared to what you will get offered, and would likely have to pay early charges to move off it early?

Dupont

https://forums.moneysavingexpert.com/discussion/comment/81866955#Comment_81866955

Sorry I misunderstood. Absolutely I will be sticking with 2.29% as long as I can.

My main goal is to reduce the 9 years 11 month term and from what I can see I could reduce that substantially with my savings even though I know I will be on a higher rate than I am now. I am hoping Barclays will work with me and something can be sorted as I don't really want to change providers.