Forum menu
I've recently reduced my rate to 1.34% and have approx 15% of the property's value to repay in terms of how much is remaining on the mortgage.
Conceivably I could clear it in two years via overpayment but wiLl.more than likely be looking to move somewhere where house prices are nearly double mine.
With this in mind would I be better keeping my current loan and porting that especially if rates increase in the next few years. Or should I clear mortgage?
Thanks
Key piece of info missing.
Need to know how long the term on your rate is.
Also unlikely you'll be able to borrow more at original rate so
15% of your current house moving to a house that's double yours.
I guess that leaves you c~43% to remortgage at what ever rate you can get
Overpay it, pay it off in 2 years and retire early.
I'd be surprised if you can port a mortgage to a new property keeping the old rate if that rate is no longer available. I'd expect you'd have to settle it and remortage. NB Happy to be wrong....
Thanks all. 👍
There's 5 years at that fixed rate.
surprised if you can port a mortgage to a new property keeping the old rate
We did, albeit 20+ years ago. Did a 5 year fix in 99, then moved 2001 porting old mortgage and taking a new one out for the extra.
When we took out the fix in 99 we were asked if there were any changes foreseen (sprogs, moving etc) & we said no. They were surprised when we went back a year or so later! But it was no hassle to port.
It’s quite likely you’ll be able to move the exiting borrowing over to the new property (though you’ll have to check the small print).
It extremely unlikely you’ll be able to borrow more as part of the same loan at the same rate. You’ll most likely be offered a second product at whatever rate is available at the time - not a problem as long as they’re both with the same lender.
The two will have different rates, can be fixed for different lengths if you want, can have different terms. They will both come with fees!
I’d say to pay off ASAP and take the saving in arrangement & product fees. No one can tell you what rates will do in future, it’s just guessing. But having this (good value) deal covering just 7% of the value of the next house and another much bigger mortgage too probably isn’t worth the fees/hassle even if you end up paying a slightly higher rate.
Pay off and keep it simple when buying the next house I say.
we did it last year, pretty common.
You can't borrow more on the existing loan, the mortgage company will do you a second mortgage and advise that your term be roughly linked to the other mortgage so they finish at the same point.
At which point you'll merge the two at whatever rate they have in 5 years (probably 100% at this rate!)
It's worth noting that if you overpay your mortgage by more than 10% of the outstanding balance in a year you'll be very likely to pay penalty charges. You may be unable to pay it off till your fix ends
Pretty pointless over paying on such a low rate. As above there may be restrictions on over paying anyway. I'd consider putting any excess money into savings (stocks and shares ISA into Vanguard or Fundsmith for me). Then when you buy you'll have a lump sum to reduce the capital amount on the new loan and port over as much as you can at your current rate.
Overpay it, pay it off in 2 years and retire early.
It'd have to be a huge monthly outgoing to really enable someone to retire surely.
And if you're looking at moving, always easier to get a mortgage when you've already got one - especially if you're not in a secure (public sector?) type job or not PAYE.
It’s worth noting that if you overpay your mortgage by more than 10% of the outstanding balance in a year you’ll be very likely to pay penalty charges.
That depends on the OP checking his agreement, e.g. mines at 15%. Just be careful not to over pay so much that the balance is accidentally settled by the monthly payments before the agreement ends.
Pretty pointless over paying on such a low rate.
That depends on whether paying of other debts would save more interest, or whether investing the money instead would pay more interest. There’s also a case for how big the mortgage is and what savings can be had by reducing the capital on which the amount of interest is calculated.
That depends on whether paying of other debts would save more interest, or whether investing the money instead would pay more interest.
Of course, but no other debt will be lower that except a 0% credit card and over a couple of years a tracker fund should do much better (although it is still risk as that is quite a short time)