WWYD brexit/mortgage

wildesavings wrote: »

My husband has been told by his colleagues that everyone should be locking themselves into a good mortgage deal ahead of Brexit.

Now I can't massively argue with this advice for the average homeowner but we (mainly me) have been MFWers for the last 4 years. We've paid off £40k (in under 4 years) whilst only earning £50k annually and we are out of term with our mortgage company after been locked into a hellish 10 year fix.

Our variable rate currently stands at 1.7% with £76k left to go, our term is 16 years remaining but we look to be done in 7 (less if I return to work) - I can't find anything that's even close to that without massive sign up fees or overpayment penalties. We OP by £300 PM with extras thrown on ad hoc.

I've always valued the advice on here - what would you do? Say on current course and ride the market (BEBR would need to get to 10% before we were paying more than we are currently).or fix the best fix.

Just need some points and ideas to fuel my arguement and stick with my gut when hashing this out with my VERY risk adverse DH.

OR
is there a secret 3rd option :rotfl:

Firstly - sorry about your hellish 10 year fix

Secondly - that's a great svr you are on. Mine was 4.2% which I went on just over a year ago.

However you question is "What would you do" So here goes;

1. I would need a comfortable savings pot.
2. I would also need to be confident I could pay £300 o/p per month of these 2 points were met, then I would go ahead with my next stage.

Which is adding the £300 o/p monthly onto my "normal" mortgage payment, then work out how many years it would take to clear the mortgage.

I would then go for a 5 year deal and reduce my years to the figure they quote with the new payment ("normal" plus o/p of £300.00).

I would also consider using a lump sum out of my savings before going into a new deal, this could be repaid back to savings rather than o/ping the mortgage for a few months (this method saved me ££'s on interest charged).

Another factor I would take into consideration would be a 0% CC :eek: used sensibly, can also make a difference.:)

These last 2 suggestions above, helped me become MF sooner than I ever thought possible.

And last comment to ponder over is in the last few years, your mortgage (interest) drops at such a rate
that your goal of MF will come quicker than you will ever think is possible :j


Good Luck x

Re 0% credit cards, you would open a card that has 0% fiance over 36 months (for example), then do a one off balance transfer in cash to your account which you then redirect to mortgage. There would be a fee for the transfer, anything from 1% to 4%.

Nobody really knows what will happen over the next couple of years, but think of a fixed rate as being a bit like insurance - you're paying a bit extra, for certainty that your payments won't go up. If a rate rise would squeeze your finances hard then that's insurance worth taking. Paying off other debt and ensuring you have cash savings are other forms of insurance too - a S&S ISA less so, as you don't want to be a forced seller in a downturn.

One potential option - when I remortgaged last year, I was able to 'lock in' a fixed rate six months ahead of the actual remortgage date. As my mortgage is relatively small, I went for a no-fee, slightly-higher rate deal, but could have cancelled it at any time up until the remortgage date without penalty. So that was effectively a free option: if I found a cheaper deal within those six months I could switch to that (at no cost), but if I didn't, I'd have the locked-in rate.

If you can find something similar, then it might be worth considering - if everything unwinds with no drama over the next few months then you could cancel the new deal and stay on your SVR, if not, you have an option to switch to even if rates jump up, as you already have the deal lined up.

Personally i'd speculate that the politicians would do everything in their power to avoid interest rate rises blowing up an over-indebted electorate in the event of a Brexit-triggered slump - substantial rate rises in an economic downturn would be horrible for many people. But that's just my speculation, nothing more.

I just locked in a 5 year fix @ 1.97%, bit of a jump up from the current 1.39% but I figured it would be worth it to ride this Brexit wave...

I regularly overpay my mortgage but kept my term the same, this gives me the flexibility if I need to return to normal monthly payments each month, I'm not currently in a position to pay off over 10% a year so it won't affect me.

Wildesavings - have you looked at First Direct? I believe they do not cap overpayments.