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  • FIRST POST
    • deejaybee
    • By deejaybee 4th Jul 18, 7:31 PM
    • 429Posts
    • 94Thanks
    deejaybee
    Fixed rate ending soon...
    • #1
    • 4th Jul 18, 7:31 PM
    Fixed rate ending soon... 4th Jul 18 at 7:31 PM
    Hi all,


    3 months to go on our Barclays 5 year fix ( 3.99)

    Original loan was 137,999 over 17 year period.


    We had a bit of a struggle getting sorted out with that one as i am self employed ( well pseudo S/E ) and myself and OH in our 50s ( hence the shortened term ) and we had been out the housing market for a few years..

    Back in 2013 the wisdom seemed to be that rates would be going up, so went for 5 year fix, rather than 2, obviously rates hardly moved, but thems the breaks..


    So onto the here and now ( as the weather ladies say )


    Have a list of follow on rates on my Barclays online account now:


    Those we are considering are :


    3 year fix @ 1.99% ( no fee ) - £834.68


    3 year fix @ 1.65% ( £899 ) - £818.02


    2 year fix @ 1.91 ( no fee ) - £830.74


    2 year fix @ 1.54 ( £899 ) - £812.68


    and the wild card - 2 year tracker @ 1.60% ( base rate + 1.10 % )
    ( no fee ) - monthly = £815.59.


    I assume the monthly payments are based on my current balance

    ( 108, 819 ) and they will be less in 3 months time, when my balance will be ( 106,583 ) according to MSE calculator.


    My simplistic calculation is that the " NO FEE" products are better as i would be paying less over the fixed period, but i suspect there is more to it than that ?


    And regarding the "wild card" tracker, it would be the law of sod, if i took that one and rates started increasing quickly, after i have sat on 3.99% for 5 years


    any advice/input appreciated, Ta
Page 1
    • Thrugelmir
    • By Thrugelmir 4th Jul 18, 8:29 PM
    • 60,971 Posts
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    Thrugelmir
    • #2
    • 4th Jul 18, 8:29 PM
    • #2
    • 4th Jul 18, 8:29 PM
    Why no 5 year or longer fixes on your list. You may have missed the way down, but now the way is up. You've still a sizable balance to repay in the next 12 years.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • deejaybee
    • By deejaybee 4th Jul 18, 9:34 PM
    • 429 Posts
    • 94 Thanks
    deejaybee
    • #3
    • 4th Jul 18, 9:34 PM
    • #3
    • 4th Jul 18, 9:34 PM
    Hi, cheers for reply.


    The main reason for not considering the 5yr / 10yr terms is that we are in a top floor flat ( 2 floors below us ) apart from being a T2 diabetic myself, we are in decent health, but that can change quickly, so this is not our forever home.
    • Thrugelmir
    • By Thrugelmir 4th Jul 18, 10:48 PM
    • 60,971 Posts
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    Thrugelmir
    • #4
    • 4th Jul 18, 10:48 PM
    • #4
    • 4th Jul 18, 10:48 PM
    Mortgages are portable to another property.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • getmore4less
    • By getmore4less 5th Jul 18, 6:54 AM
    • 33,458 Posts
    • 20,217 Thanks
    getmore4less
    • #5
    • 5th Jul 18, 6:54 AM
    • #5
    • 5th Jul 18, 6:54 AM
    My simplistic calculation is that the " NO FEE" products are better as i would be paying less over the fixed period, but i suspect there is more to it than that ?
    Lower rates pay off more of the mortgage even with a lower payment.


    using £108,819 12y 3m I get

    option rate fees payment add fees
    1 1.54% £899 £812.76 £819.47
    2 1.91% £000 £830.83 £830.83
    3 1.65% £899 £818.10 £824.86
    4 1.99% £000 £834.77 £834.77
    payments look close enough

    looking at the amount owing in 2 and 3y (if rates stay the same for the 2y in Y3) not adding fees.

    amount owing 2 3
    1 £92,423.75 £84,034.93
    2 £92,743.73 £84,473.06
    3 £92,519.27 £84,165.60
    4 £92,812.43 £84,567.26

    As you can see with the lower rate you owe less so need to account for that

    take account of the fees by adding(could take them off the no fee) and see what's left

    add fee 2 3
    1 £93,187.30 £84,729.17
    2 £92,743.73 £84,473.06
    3 £93,283.61 £84,860.93
    4 £92,812.43 £84,567.26


    now make the payments the same so cash flow is equal for all 4 deals.

    payment £835.00
    1 £92,809.10 £84,157.46
    2 £92,641.74 £84,318.58
    3 £93,036.43 £84,487.07
    4 £92,806.74 £84,558.63


    2 years deal no fee is best
    3 years deal the fee is the best

    In three months the numbers will change as the smaller mortgage favours the no fee,

    using your number £106,583 and 12y

    option rate fees payment add fees
    1 1.54% 899 £811.13 £817.97
    2 1.91% 0 £828.81 £828.81
    3 1.65% 899 £816.36 £823.24
    4 1.99% 0 £832.66 £832.66

    add fees payment the same

    payment £833.00
    1 £90,551.92 £81,889.45
    2 £90,367.63 £82,024.87
    3 £90,774.23 £82,211.44
    4 £90,528.95 £82,259.32

    reduced the fee/nofee difference on the 3y to £48.
    very close needs real switch numbers when ready.

    If you overpay then that needs to be factored in as well

    As all the rates are lower than your current rate can you switch early?

    if you look at the last set of numbers
    at Y3 the 2y(no fee) is only £190 ahead of the 3y fix,

    if we add in a 0.25% rise at year 2 for another 2y fix at Y3 you would owe £82,243.45 so now £30 behind.

    again very close so real switch numbers at the time will be the decider on fee/no fee. along with your intentions to overpay.
    • deejaybee
    • By deejaybee 5th Jul 18, 7:37 AM
    • 429 Posts
    • 94 Thanks
    deejaybee
    • #6
    • 5th Jul 18, 7:37 AM
    • #6
    • 5th Jul 18, 7:37 AM
    Hi getmore4less,


    Thank you for your comprehensive reply


    Regarding if we can switch early without ERC, i dont know, i assumed not, will find out.


    What do the figures look like for folowing 5 year fixes please ?


    2.19% ( no fee ) - £844.58


    1.93% ( 899 ) - £ 831.73


    again the figures are based on current balance 108,819.




    Also the ( no fee ) 2 yr tracker @ 1.60 % ( 815.59) but that only allows for maybe 1 or 2 0.25% rises, before its starts to look uncompetitive ?


    Thanks
    • getmore4less
    • By getmore4less 5th Jul 18, 8:39 AM
    • 33,458 Posts
    • 20,217 Thanks
    getmore4less
    • #7
    • 5th Jul 18, 8:39 AM
    • #7
    • 5th Jul 18, 8:39 AM
    adding in the two 5y options


    Mortgage £108,819.00
    Full term 12 3

    option rate fees payment add fees
    1 1.54% 899 £812.76 £819.47
    2 1.91% 0 £830.83 £830.83
    3 1.65% 899 £818.10 £824.86
    4 1.99% 0 £834.77 £834.77
    5 1.93% 899 £831.81 £838.68
    6 2.19% 0 £844.67 £844.67

    amount owing 2 3 5
    1 £92,423.75 £84,034.93 £66,864.95
    2 £92,743.73 £84,473.06 £67,450.55
    3 £92,519.27 £84,165.60 £67,039.31
    4 £92,812.43 £84,567.26 £67,576.83
    5 £92,760.92 £84,496.62 £67,482.13
    6 £92,983.41 £84,801.92 £67,892.01

    add fee 2 3 5
    1 £93,187.30 £84,729.17 £67,417.35
    2 £92,743.73 £84,473.06 £67,450.55
    3 £93,283.61 £84,860.93 £67,593.15
    4 £92,812.43 £84,567.26 £67,576.83
    5 £93,527.26 £85,194.69 £68,039.63
    6 £92,983.41 £84,801.92 £67,892.01

    payment same £845.00
    1 £92,565.53 £83,789.26 £65,826.28
    2 £92,397.29 £83,948.37 £66,559.01
    3 £92,792.59 £84,118.27 £66,334.57
    4 £92,562.10 £84,187.99 £66,931.85
    5 £93,372.82 £84,960.76 £67,642.07
    6 £92,975.28 £84,789.60 £67,871.00

    ------------------------------------------------------------
    comparing the 2y tracker to the two 2y fixes with 6 month data points.

    option rate fees payment add fees
    1 1.54% 899 £812.76 £819.47
    2 1.91% 0 £830.83 £830.83
    3 1.60% 0 £815.67 £815.67

    skipping to the add fees make payment the same amount owing at 6, 12, 18 24 month

    payment same £831.00
    1 £105,563.52 £101,376.95 £97,158.03 £92,906.53
    2 £104,856.48 £100,855.97 £96,817.11 £92,739.51
    3 £104,689.81 £100,527.48 £96,331.73 £92,102.31

    tracker looks good if you think rates are stable.

    adding two rises for the tracker 0.25% at 6m and 12m

    rate rises 0.25% 0.25% 0.00%
    3 £104,689.81 £100,656.67 £96,710.34 £92,722.39



    exact timings will change the break even but 2 rises are are going to make this close at the 2 year point if they come in the first year

    pushing out the rises to 12,18 months you could take 0.50% at 12m and another 0.25% at 18m
    rate rises 0.00% 0.50% 0.25%
    3 £104,689.81 £100,527.48 £96,579.78 £92,709.69
    • deejaybee
    • By deejaybee 5th Jul 18, 6:22 PM
    • 429 Posts
    • 94 Thanks
    deejaybee
    • #8
    • 5th Jul 18, 6:22 PM
    • #8
    • 5th Jul 18, 6:22 PM
    Thanks again !


    I am a bit confused - which " amount owing" figure is the one i should concentrate on ? the " add fee" one or the "payment same " one ?


    Thanks again
    • getmore4less
    • By getmore4less 5th Jul 18, 6:47 PM
    • 33,458 Posts
    • 20,217 Thanks
    getmore4less
    • #9
    • 5th Jul 18, 6:47 PM
    • #9
    • 5th Jul 18, 6:47 PM
    the ones with payment same include adding any fees,

    that is the calculation that uses the same cash from your pocket and tells you what is left for the given rate.

    remember the 2&3 ar based on the rate staying the same and no new fees beyond their first fixed term.
    • deejaybee
    • By deejaybee 5th Jul 18, 7:24 PM
    • 429 Posts
    • 94 Thanks
    deejaybee
    Just spoken to Barclays online advisor - the new rates would start when my current fixed rate ends, but i can reserve new rate from July 3rd.
    • dimbo61
    • By dimbo61 5th Jul 18, 9:02 PM
    • 10,071 Posts
    • 5,451 Thanks
    dimbo61
    Well you sat on 3.99% for 5 years and can now get a new deal of 2.19 % fixed for 5 years so nearly half your current interest rate.
    Sign up in the morning unless you have a spare £900 to take the cheaper deal with a fee.
    Ask to keep your mortgage payment the same as you are paying now
    Job done
    A Mortgage is a marathon not a sprint.
    Overpay as much as you can each month provided you have no other expensive debts
    Last edited by dimbo61; 05-07-2018 at 9:22 PM.
    • lee111s
    • By lee111s 6th Jul 18, 8:37 AM
    • 2,900 Posts
    • 1,972 Thanks
    lee111s
    Well you sat on 3.99% for 5 years and can now get a new deal of 2.19 % fixed for 5 years so nearly half your current interest rate.
    Sign up in the morning unless you have a spare £900 to take the cheaper deal with a fee.
    Ask to keep your mortgage payment the same as you are paying now
    Job done
    A Mortgage is a marathon not a sprint.
    Overpay as much as you can each month provided you have no other expensive debts
    Originally posted by dimbo61
    There should be some caveats with that;

    Only if you have an emergency fund.

    Consider increasing pension payments (itís often more tax efficient).
    • deejaybee
    • By deejaybee 6th Jul 18, 9:03 AM
    • 429 Posts
    • 94 Thanks
    deejaybee
    Thanks for further input/opinions.


    About to leave for work now, will update this evening, as some of the new points apply to my situation.
    • deejaybee
    • By deejaybee 6th Jul 18, 9:34 PM
    • 429 Posts
    • 94 Thanks
    deejaybee
    Have gone for the 3 year fix @ 1.99 ( no fee )


    Regarding the overpay mortgage/increase pension payments question:


    Now that i have sorted the mortgage out, i am planning to start a thread over on the Pension forum, where i will go into more detail..


    But, briefly, i think i am between a rock and a hard place,


    I am 58 later this year, and the mortgage is scheduled until age 70 - i dont want to be working at that age, but i accept that until mortgage is paid off, i have to keep grafting - so that points towards overpayment..


    On the other hand, i havnt contributed to a pension ( apart from state pension) in the 8 years or so i have been (pseudo) S/E..
    Myself and OH are on course for full SP, i have been taking a 2K a year pension since age 55 to build up rainy day fund, and will continue with that.. also have an approx 5K a year pension ( if no TFLS ) at age 65.


    But i know they are kiddy figures compared to a lot of folks on here... i went thru a divorce in my 40's which knocked me back a lot financially..


    So i am in a quandary whether to try to clear mortgage asap, or whether to improve my pension outlook with not too many years left, or try to do both ? I dont want to work till i drop, but dont want to be retired in poverty either.


    My retirement age for SP is 66 and 7 months.


    Potentially there is inheritance somewhere over the horizon, and also a recent tribunal decision has raised possibility of getting several years of holiday pay backpaid.

    I am NOT including any of those in my outlook/calculations.


    Sorry its a bit of a brain dump, hope it makes sense sort of ?
    • getmore4less
    • By getmore4less 7th Jul 18, 4:45 AM
    • 33,458 Posts
    • 20,217 Thanks
    getmore4less
    The end game needs both sorting.

    With the pension route you convert the overpayments to a lump sum or into an income to cover some of the mortgage.

    Crunch some numbers and see what you can do by say 65.

    Another strategy is to start to budget current living at a lower level, this gives you an idea of you Low spend footprint(adjust for not working) and helps the saving pot if it is lower than current spends.

    A rough guide is you need a pot of 20-25 times your spends, less if you use a zero sum draw down end game and a target date not too far into the future(fall back is state pension).
    • Thrugelmir
    • By Thrugelmir 9th Jul 18, 8:43 PM
    • 60,971 Posts
    • 54,174 Thanks
    Thrugelmir
    But i know they are kiddy figures compared to a lot of folks on here... i went thru a divorce in my 40's which knocked me back a lot financially..

    Originally posted by deejaybee
    You are far from alone in this regard.

    and the mortgage is scheduled until age 70
    Age catches up with us all. For peace of mind and security I'd clear the mortgage first. After that make hay while the sun still shines.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
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