Owning your own home

Fixed deal. Because Brexit. Fixed for about 3(?) More years.
Am 45.
Probs about 18-20 years.
Need to look at the terms properly.
Just at the start of the ski jump. I've heard ski jumpers make good cyclists. I'm hoping for the other way round.

If you're 45, you could get (technically) a 25 year mortgage, which would make your monthly amount lower. You've likely also built up more equity since the 5 year fix was taken out. I would speak to an IFA, they would be able to give you all the options. It could be that any repayment charge to break the 5yr fix could be saved over the course of the new deal.

We are looking at a 31 year 5yr fix term (I'm 38) and even with the repayment charge and moving from a 2 bed flat to a 5 bed house, our monthly payments will only be £100 more than they are now.

I had to get it out of my head that getting a 31 year term doesn't have to mean paying a mortgage until I'm 70. We can move or overpay and get a different deal in 5yrs, and later moves are likely to be out of London or to a smaller place, which would pay off the mortgage.

I have a question out to our broker about the early repayment charge.

Currently, it is 3%. But, we are allowed to overpay by 10% each year. So, is that 3% calculated against the whole balance, or 90% of the balance, seeing as we should be able to repay 10% of it without a charge?

Would make about £580 difference. Which is not much in the grand scheme of things. But could be a room getting decorated, or a couple of appliances.

We're hoping to complete on a money-pit listed property next week.

We found it useful to check the local planning portal to see what the seller and neighbours had been up to. Good indication of what is and isn't permitted and also some insight into the process and reasoning.

For example ours had been reconfigured upstairs last year and the seller was forced to completely change when listed building consent was retrospectively sought and rejected multiple times. Explained why it came off the market previously. Things like painting our shed needs approval on the colour as do window frames and cleaning the stonework. Good to know at the front end rather than waiting for things to get flagged by a solicitor much later.

The many questions I've fired to the listed building folks have been answered promptly. This isn't London and it's our first house so no idea what's normal.

It'll be 3% against the 90% since you can make the 10% overpayment first and then request to pay off the rest early. Can't imagine any mortgage company will prevent you doing that.

Just remember that most mortgage companies take the 10% limit to be against the balance at the start of the year so if you've made overpayments already this year they'll eat in to the 10% you can pay now without charge.

I've got 8 years left and can pay 10% a year back which means I'm a long way off being able to pay it all back via overpayments (I'm on interest only), some of it will have to be done as a lump sum when it comes to renegotiation: 0.9 ^ 8 = 43%

Isn't the 3% a charge for early repayment of the whole mortgage and the 10% the amount you can pay as an over payment each year of the original mortgage ?
Mortgage = 100000 so 3ooo (3%) to pay the whole thing off.
Mortgage = 100000 so 10000 (10%) you can overpay each year to reduce the mortgage balance.

Yeah, again I was overthinking it. Broker just came back and said, nah.

Yes, that's what he's getting checked out.

So if you wanted to pay off 100,000 you'd pay:-

10,000 off with no repayment charge, leaving 90,000, and then pay 3% of the 90,000. Giving a total of 102,700.

Rather than 3% of the whole 100,000 which would mean a total of 103,000.

You see, that's what I had hoped. Maybe my broker didn't understand the question. He just came back with "Its 3% charge on the day you redeem the full mortgage". I need to think of a tactful way of saying, "that doesn't answer my question".

but we are now spending almost as much as the purchase price on sorting out its problems

This is how I own cars.

Halifax's website says "If the total amount you overpay during the year exceeds 10%, we'll only charge you an early repayment charge on the proportion you overpay above 10%."

I asked my mortgage provider how much they would charge to pay off the whole off my mortgage (a piddling £3700) and they quoted £36 so I then asked what if I made an overpayment of £3700 which is easily within my 10% annual allowance.

How we both laughed.

what if I made an overpayment of £3700 which is easily within my 10% annual allowance.

That's the point I was trying to make earlier.

If you started the year owing less than £37000 then you wouldn't be able to make a free overpayment of £3700 as that would be more than 10% of the balance at the start of the year.

(Some of the overpayment would be free, but not all of it.)

For most mortgage companies the 10% annual allowance is not 10% of the initial mortgage, but 10% of the balance at the start of calendar year.

Broker still saying the ERC is on the full balance, not minus 10% of the balance at 1st Jan.

This annoys me

I've just redeemed my mortgage with Halifax, they charged me the early repayment amount on the full balance. (It didn't occur to me about there potentially being a permitted element of 10% even though I was permitted to overpay by that amount.)

Trying to google for the scenario but not getting anything. I'm sure it is just a case of them saying, "nah, ERC on the full balance" but I'm wondering why nobody else seems to have thought of this. Am I peculiar? Does it make sense to anyone else?

I'm with YBS, just been through our paperwork and our ERC is calculated on the remaining balance on the account and not the start of the year balance.

Yes, the ERC is. But the overpayment allowance is usually (as is the case with Halifax) based on the start of the year.

It makes sense to me. I'd make the maximum overpayment possible, wait a day for that to go through, and then ask the mortgage company how much to pay off the rest.

They could only charge ERC on an amount other than the outstanding balance if the T&Cs said they could. There could, theoretically, be a clause in there to say "ERC is due on the outstanding balance and any overpayments made within 12 months of the early repayment." but I really doubt they'd have that anywhere.

Looking at my most recent mortgage statement (Santander) I can see that the "cost to pay off the mortgage now" figure takes into account the remaining overpayment allowance rather than a blanket application of the ERC across the whole outstanding sum.

Other mortgage providers may differ.

I think the broker is taken to cost to repay directly from Halifax, which doesn't take into account any of my tight fisted ass-hatery

From memory, when we left a 5yr fix with Natwest early, we overpaid by the maximum permitted 10% and then paid the 'fine' on the remainder. I would not have let something like that go, even if it amounted to very little!

While £600 is £600, I'm now inclined to not do anything that could delay completion so may just have to suck it up and quietly seethe for a bit

I assume the issue is potentially that you would have to make the payment in two tranches (one overpayment and one early redemption with the overpayment possibly being at an earlier date to differentiate it) and a lot of people don't have the spare cash to make a 10% overpayment at an earlier date, particularly if they're also paying a deposit on a property they are buying.

We have the cash, it would just mean a whole rejigging of what £ sits where. It would lower the cash part of the deposit, but would also lower the amount of mortgage needing to be repaid, which would mean we'd still have the same amount to put into the new purchase (actually, we'd have £600 more WHICH IS THE FUCKING POINT, HALIFAX!!!). If I controlled all the ones and zeros, I'd do it, but I don't trust the admins at Halifax + Adam Bank + Mortgage Broker + Solicitor to sing from the same shifting hymn sheet so won't rock the boat any further.