Mortgage Rate Rises
- Thread starter glenimp617
- Start date
Soldato
Yea I don't see it dropping much at all any time soon.
To be honest things are starting to pick up, it's been a tough 18 months but things are starting to adjust, really back to normal, in the scheme of things.
I actually think reducing the base rate now would do more harm then good.
To be honest things are starting to pick up, it's been a tough 18 months but things are starting to adjust, really back to normal, in the scheme of things.
I actually think reducing the base rate now would do more harm then good.
Soldato
IMO take the fix, pay the amount of the tracker off the fix (ie the £3208 monthly), if you can afford it which it sounds like you can.
eh? the tracker needs to drop below 3.6 within 12 months for the tracker to be a worthwhile option
this
Speak to an adviser
Yeh I hadn’t thought of that. If you can afford to pay 5.XX% then this!
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Depends on your circumstances etc but personally, i'd take the fix and overpay (which by sounds of it you can do). Interest rates can go up as well as down (no-one can see the future)
Thanks. Appreciate your input. How do you get to that point?
5.4 - 4.57 = 0.83
so for the first year, in addition to paying an extra £500 product fee, you are paying an extra 0.83% interest rate
accounting that your capital sum is always higher at the start, so, for the tracker, you'd need about a 1% decrease from the 4.57% interest rate (of the fixed) to balance the total payments within the two years
so for those two mortgages to be equal, you'd need the tracker to drop from 5.4% to approx 3.6%
it's just the back of the fag packet maths, if you want to do the actual calculations:
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Absolutely no chance I'd take a tracker at higher rate with higher fees over 2 years. The fixed rate isn't even that high, it might be different if we were talking rates over 6% with clear signs of a looming recession (by which I mean like the situation going into 2008 where everyone knew it, not just a few people looking at it and making predictions, even if they are accurate) and housing market decline, but even then, those fees for a 2 year tracker are bonkers. Pay £500 extra, to pay more interest if the status quo remains the same, end up with less equity at the end of the two years because you've repaid less capital, risk of paying EVEN MORE if rates go up = no thank you very much.
I'm not against trackers per se, I've taken one in the past, but that was a lifetime tracker with no fees so I knew I'd never need to pay an arrangement fee unless I decided to switch (plus obviously I expected interest rates to fall significantly in the short-medium term at that point in time, which isn't the case currently).
I'm not against trackers per se, I've taken one in the past, but that was a lifetime tracker with no fees so I knew I'd never need to pay an arrangement fee unless I decided to switch (plus obviously I expected interest rates to fall significantly in the short-medium term at that point in time, which isn't the case currently).
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Soldato
- Joined
- 23 Mar 2011
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Hey all, I'm not overly clued up on anything related to mortgages or how it all works. Silly as it sounds.
Anyways, I've been wondering if I should be overpaying a bit.
We are currently on a 1.78% fix until the end of 2025. Pay about £620 a month. Not sure what the rate will go to when this current deal is up.
Currently have approx £154,000 left to go. And at an estimate based on our neighbours sale recently, the house would likely be worth around £270-280,000ish now. So I think the LTV is good? I don't get it I must admit
So I was wondering if there would be any major benefit to say overpaying now by like £100ish extra a month until this deal ends? Doesn't really seem like it would be a lot to make a big difference? Or is it best to carry on as we are.
Just thinking, overpaying a bit now will help us get used to the impending doom of the higher rate that's waiting for us
Anyways, I've been wondering if I should be overpaying a bit.
We are currently on a 1.78% fix until the end of 2025. Pay about £620 a month. Not sure what the rate will go to when this current deal is up.
Currently have approx £154,000 left to go. And at an estimate based on our neighbours sale recently, the house would likely be worth around £270-280,000ish now. So I think the LTV is good? I don't get it I must admit
So I was wondering if there would be any major benefit to say overpaying now by like £100ish extra a month until this deal ends? Doesn't really seem like it would be a lot to make a big difference? Or is it best to carry on as we are.
Just thinking, overpaying a bit now will help us get used to the impending doom of the higher rate that's waiting for us
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Put your £100 a month into a 5% savings account. Put the total towards your mortgage as a single overpayment in 2025 when it is due renewal. You'll make "more".Hey all, I'm not overly clued up on anything related to mortgages or how it all works. Silly as it sounds.
Anyways, I've been wondering if I should be overpaying a bit.
We are currently on a 1.78% fix until the end of 2025. Pay about £620 a month. Not sure what the rate will go to when this current deal is up.
Currently have approx £154,000 left to go. And at an estimate based on our neighbours sale recently, the house would likely be worth around £270-280,000ish now. So I think the LTV is good? I don't get it I must admit
So I was wondering if there would be any major benefit to say overpaying now by like £100ish extra a month until this deal ends? Doesn't really seem like it would be a lot to make a big difference? Or is it best to carry on as we are.
Just thinking, overpaying a bit now will help us get used to the impending doom of the higher rate that's waiting for us
who knows what the rate will be at the end of next year. as a rule of thumb, for your mortgage size, expect to pay an extra £100/mth per 1% rise in interest rates
so, if you were to fix at 4% next year, you'd be paying about £840/mth
you'd be looking at 60% LTV, which unlocks the best mortgage rates as you have lots of equity in the property
don't overpay. you should be saving instead as the savings interest rates are higher than your mortgage interest rate. (see below)So I was wondering if there would be any major benefit to say overpaying now by like £100ish extra a month until this deal ends? Doesn't really seem like it would be a lot to make a big difference? Or is it best to carry on as we are.
Just thinking, overpaying a bit now will help us get used to the impending doom of the higher rate that's waiting for us
what @dlockers said.
(or, what would be most beneficial for you is actually a regular saver account)
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Hey all, I'm not overly clued up on anything related to mortgages or how it all works. Silly as it sounds.
Anyways, I've been wondering if I should be overpaying a bit.
We are currently on a 1.78% fix until the end of 2025. Pay about £620 a month. Not sure what the rate will go to when this current deal is up.
Currently have approx £154,000 left to go. And at an estimate based on our neighbours sale recently, the house would likely be worth around £270-280,000ish now. So I think the LTV is good? I don't get it I must admit
So I was wondering if there would be any major benefit to say overpaying now by like £100ish extra a month until this deal ends? Doesn't really seem like it would be a lot to make a big difference? Or is it best to carry on as we are.
Just thinking, overpaying a bit now will help us get used to the impending doom of the higher rate that's waiting for us
Have a 200k mortgage and on 1.93.
So similar position and I'm not overpaying a penny.
With savings rates at 5pc you'll get far more as @dlockers said putting what you'd overpay into a 5+ percent saver and paying off a chunk at end of the term.
oh my dear lord not this againBut then he only gets half the apr?
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Hey all, I'm not overly clued up on anything related to mortgages or how it all works. Silly as it sounds.
Anyways, I've been wondering if I should be overpaying a bit.
We are currently on a 1.78% fix until the end of 2025. Pay about £620 a month. Not sure what the rate will go to when this current deal is up.
Currently have approx £154,000 left to go. And at an estimate based on our neighbours sale recently, the house would likely be worth around £270-280,000ish now. So I think the LTV is good? I don't get it I must admit
So I was wondering if there would be any major benefit to say overpaying now by like £100ish extra a month until this deal ends? Doesn't really seem like it would be a lot to make a big difference? Or is it best to carry on as we are.
Just thinking, overpaying a bit now will help us get used to the impending doom of the higher rate that's waiting for us
If you have 154k to go on the outstanding balance and your house is worth 270k, then your loan to value (LTV) when you remortgage will already be under 60%. i.e. You own more than 40% of it already (equity). The best remortgage deals (or rates) tend to be for people who reach under 60% LTV. No overpayments you make now will therefore affect the rates you get offered when it is time to remortgage, but obviously paying off more ahead of any remortgage is good to minimize how much more you will pay in the new higher interest rate when you remortgage. As @dlockers said, currently because you are on a low interest rate on the mortgage, it would be better to place any overpayments you were considering into a high interest savings account, then just before you remortgage, take it out and do a lump sum overpayment.