I am on a variable rate with Halifax and based on the overpayments I am making, mortgage will be cleared in 4 years. variable rate just now is 3.74%.
However there are fixed rates of 2 years available at Halifax (2.04%) or Nationwide (1.6%).
Sense would say I might as well move to a two year fixed and make some savings on interest from what I am paying just now. There is a slight caveat that the fixed rate only allows you to overpay by 10% so I would need to put the balance aside into a saver account to then pay against the mortgage at the end of the fixed rate. But this is only about £20 or so per month so not a big issue.
(I prefer making this additional payment voluntarily as it gives me scope for emergencies etc that I could forego the extra payment rather than having a mortgage based on it).
Having bored you with all that, I have been with the Halifax with my mortgage since it was the old Leeds Permanent and when we took a top up I just stayed with them.
If I move to Nationwide (and their blurb says they cover legal fees etc) what's ACTUALLY involved in that from a legal point of view. If its relevant, I haven't dealt with a solicitor since my first mortgage in 1991, couldn't tell you his name or whether he is alive!
Anyone been through similar? I am a serial switcher when it comes to my gas and electricity but that's a case of filling out a couple of online forms. I have never switched my mortgage!
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With a mortgage at the beginning the payments are almost all INTEREST & little payback of capital.
Near the end the payments are nearly all Capital & little is interest.
With 4 years to go the cost of change - lawyer's fees, setup costs etc etc will negate any interest payments - Banks & building Soc will not really want small mortgages with 4 years left!
Relax -stay where you are - with 4 years to go you are nearly there!
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Without knowing the payments, it's difficult to determine any financial advantage or otherwise, but FB is likely to be right.
I paid my mortgage off years ago, having also got ahead of the game by "overpayment". At that time, there was always an option (given you were "ahead") of returning the same mortgage to its original term (or a negotiated, interim term), thereby (and by an amount dependent on the change of term) immediately reducing ongoing monthly payments.
Patently, (re-)extending the term means a higher amount finally paid, but, If you're simply looking to cover future potential contingencies, it might be worth asking The Halifax whether reducing monthly payment via this method would be an option, should you ever want it.
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What FB says, unless you can get a deal that pays legal fees etc.
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I agree with Fallirk Bairn. Too much hassle for little if any return..
I did pay off my mortgage some years ago by making overpayments and the feeling when that last payment is made is really good....
Just a point ,not wanting to sound like an unwanted telephone call or daytime TV ad but...not having consulted a solicitor since 1991 it is probably worth checking that you were not sold unnecessary PPI....
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Sorry, thought I had said, both deals have no fees and they cover legal expenses.
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£10,000 over 4 years @ 4% is £226/month
£10,000 over 4 years @ 2% is £218/month
Not worth the hassle for £2.00 per week
I do not know what you owe but if it is £20,000 then it is £4.00 per week
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Amount is £22k
£4 a week over 2 years, is £400 which I would prefer in my pocket than the banks!
Especially if I stay with Halifax and so just need to fill out an online form.
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And, of course, this is a fixed rate for 2 years at a rate less than my current variable rates.
personally, I feel that rates aren't going to go any lower so if it seems a no brainer for next 2 years anyway?
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If fees are included go for it. Make sure that the survey fees are included. Seems to cost around £400 for a basic one around here
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Bobby - stumbling block
Nationwide website
There is a minimum borrowing limit of £5,000 for all existing mortgage customer transactions and £25,000 for all new mortgage customer transactions.
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Cheers FB that rules that out.
So prob best to stay where I am , just take out the new fixed rate and then don't need to worry about as much paperwork!
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>>So prob best to stay where I am ,
My Reply No 1 stated as much....
you have to get up very early in the morning to beat me on household finances!!
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Ah but FB I will stay where I am but switch to the fixed rate!
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>>but switch to the fixed rate!
How much is the fee for this arrangment?
Fees can vary from zero to £1000/£1500 for a 5 yrs contract!
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Do you have any spare capital? Rules on capital differ but at this stage in the game, a capital repayment can shorten the period of the loan considerably.
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Have you thought about getting up to 60% equity released with a fixed 10 years deal? The older you get, the harder it gets to raise funds via a mortgage.
(take HSBC: 10yrs fixed at 2.64% =3%APRC, 10% annual over-payment allowed, invest the cash raised to make 5%+ income plus potential capital growth in UK FTSE100 stock markets. You and spouse can put in £20k each in 2017/18 ISA to get the income tax-free. Shame you can't use 2016/17 allowance which ended yesterday).
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I took out one of those VirginOne offset mortgage accounts for the last few years of my mortgage - overpaid every month and wore the mortgage down in 5 years instead of 12. Worked very well for me in my then position.
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Remortgaging - whats involved? - Falkirk Bairn
