Mortgage advice

Soldato
Joined
3 Dec 2002
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Groovin' @ the disco
Hi people... :)
My current deal ends Feb 2023 and I can't secure another deal until Oct 2022.
I'm not sure if I should wait until October, secure a deal and get it actived when my current ones ends or take the 1% hit on my outstanding mortage which is around 1K and secure a deal now and get it moved before intreast rates rise again.
I'm planning on taking another 5 year deal, I'm not sure if the £1,000 pound hit I take will cost me more than the differences in intreast rates, surely they can't rise from the ~2.75% that I'm seeing at the moment.

Thanks
 
Soldato
Joined
9 Nov 2008
Posts
7,014
Put all the figures into a spreadsheet and work it out. Someone on MSE made an amazing one a few years ago for comparing mortgages.

Without entering all the figures (amount outstanding, loan length etc...) it's impossible for anyone to give any meaningful advice on your situation.
 
Joined
4 Aug 2007
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Wilds of suffolk
£1000 over 5 years isn't that much, its £17 odd a month.

You need to try to predict the cost where A is > B and decide if you want to take that risk

A= the £1000 plus the additional cost of moving now, eg if your paying £750 a month and the new mortage would be £800 you would need to take the £50 x the months left. Thats you additional cost.

B= The difference between the rate you pay now and the remainder of the 5 years at x rate. Thats your risk. So if you think it could go up by £50 each year you can calc x the number of months for each year what the additional cost you expect over the time.
(You need to take 5 years less the remaining you have now on your deal to get a fair value)

Its highly dependent on the rate you have now, how large your mortgage is. £1k fee on an £500k mortgage is basically irrelevant when evaluation the impact of rate rises.
£1k on a £50k mortgage is significant.

There is no knowing where rates will go. We could just as easily see the rate rises we have had and will probably see soon being reversed out in 12-18 months time as further rate rises.

Other thing to consider is where is your pain point. If you will quickly get to the point where rate rises are going to be a problem for you then your leanign to fixing now. If you have a large gap between your costs and what you can afford to pay your more in a position to be able to gamble.
And gamble is what it is!
 
Caporegime
Joined
13 Jan 2010
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Llaneirwg
You've probably missed the boat and should have done it earlier. Note I said probably. It's a hard decision.

Was in same position you (exactly the same )
My mortgage ends 2023 with a significant 208k on it

Get excel out.

I worked out that the best mortgage rate only needed to rise 0.4pc for me to be in profit fixing now (March 2022) and paying the 2k fee

Also what really scared me is working out that the base rate going up to 5pc (unlikely I hope) would mean my mortgage costing an extra 600ppm.

600ppm. Is a frightening amount.


I fixed. I fixed at 1.93. My offer came through in April.
For reference the best rate now is 2.4pc so in 2 months I already made the right call.

It's a long way to go until October!
 
Soldato
Joined
3 Dec 2002
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Groovin' @ the disco
Thanks everyone,
I got the spreadsheet out...
I have 96K left on my mortage, hence the 1K (1%) cost for moving early. My current deal is at 2.99% ARP as it was a LTV of 90%.
Due to me paying my mortage and house value going up, I can now get a LTV of 60% deal, my current mortage vendor has a five year package at 2.55% thou I have seen it lower at other places so a move is in order.

To cover the 1K cost, the APR needs to rise to 2.64 before it covers the costs with the interest being charged.

I do plan to pay more than I'm paying at the moment with overpayments as I've switched jobs (twice) since taking the orginal mortage and want to pay of the mortage ASAP.
 
Associate
Joined
12 Apr 2020
Posts
1,340
Thanks everyone,
I got the spreadsheet out...
I have 96K left on my mortage, hence the 1K (1%) cost for moving early. My current deal is at 2.99% ARP as it was a LTV of 90%.
Due to me paying my mortage and house value going up, I can now get a LTV of 60% deal, my current mortage vendor has a five year package at 2.55% thou I have seen it lower at other places so a move is in order.

To cover the 1K cost, the APR needs to rise to 2.64 before it covers the costs with the interest being charged.

I do plan to pay more than I'm paying at the moment with overpayments as I've switched jobs (twice) since taking the orginal mortage and want to pay of the mortage ASAP.
so you can get 2.55% which doesn't cover the cost of the £1k move, but if it goes over 2.64% it will.... so you're pretty close already...one rate hike of .25% will immediately make it profitable to switch...

Just quickly on my phone, rate of 2.55 is lower than you're paying at 2.99, so in a year you save £422 in interest on that, and every rate rise of 0.25% adds £240 a year in interest payments, so as your fixing, every 0.25% increase will cost £1200 in interst over the 5 year.

did a uswitch search, Barclays offering a 5yrs at 2.25% from a quick look (used 60:40 LV (mortgage £96k 60%, so 100% property value £160,000)...so 2.99 down to 2.25 over a year is £710

Now with inflation at 40 year high, and going to go up again in oct when new energy tariffs quick in pushing everything else up again, I would say interest rates are only going one way...take the small hit for peace of mind
 
Soldato
Joined
17 Oct 2002
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10,103
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Stoke
Here's a link to the "Ditch your fix" calculator - useful for anyone else as well:


Ours finishes in 2024 - it worked out that for us we'd need a new rate of 1.14% to make it worth it which isn't available so it's better for us to stay at the moment.
 
Soldato
Joined
11 Apr 2006
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6,650
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Earth
I have no idea what this means...

Only ditch your fix if you can get a mortgage with a rate less than...
(Based on a £214,370.67 mortgage, currently at 2.09%, with a £6,431.12 early repayment charge)
-3.8%

If there's an arrangement fee, as mostly happens, the rate would need to be lower.

To save, you'd need a rate of...​

Arrangement feeRate
£0-3.8% or lower
£500-4.25% or lower
£1,000-4.7% or lower
£1,500-5.15% or lower
 
Caporegime
Joined
13 Jan 2010
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25,617
Location
Llaneirwg
Here's a link to the "Ditch your fix" calculator - useful for anyone else as well:


Ours finishes in 2024 - it worked out that for us we'd need a new rate of 1.14% to make it worth it which isn't available so it's better for us to stay at the moment.

I don't believe this helps in anyway in this situation

For example mine says I need a rate of 0.5pc to 'ditch my fix'.
What it fails to take into account is when I'm finished if I didn't ditch I'd be forced onto 3pc.

Thus ditching my fix was a good idea.
 
Soldato
Joined
17 Oct 2002
Posts
10,103
Location
Stoke
I don't believe this helps in anyway in this situation

For example mine says I need a rate of 0.5pc to 'ditch my fix'.
What it fails to take into account is when I'm finished if I didn't ditch I'd be forced onto 3pc.

Thus ditching my fix was a good idea.

I see your point! I guess that calculator is only relevant if the rate stays close to where it is now.
 
Soldato
Joined
9 Nov 2008
Posts
7,014
This spreadsheet should be helpful, you can plug in all your current figures, what you can get now and then what you expect to get when your current deal ends and work out the different situations and how they would play out.
 
Soldato
Joined
3 Dec 2002
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3,946
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Groovin' @ the disco
Silly question, when you're looking at for the comparison point for the "best" outcome. What are people looking for?
The vaule that's left on mortgage at the end of the term?
The amount of interest that needs to be paid during that term?

I know that they both related, as the more interest they charge the more that will be left on the mortgage...

I guess my situration is complicated by wanting to end my current agreement before it's over, paying more and having overpayments...

Also a factor that's not being mention is that the sooner I take a new mortgage, the sooner it will end; god knows what the intrest rates will be like at that time.
 
Associate
Joined
2 Mar 2007
Posts
216
I think it is reasonable to expect interest rates of 2% or more by the end of the year given inflation, and with that in mind the 'good' mortgage deals will probably start disappearing if they haven't already.
 
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