paying interest on £180,000 instead of £200,000 over 25 years will save you a lot more in the long run than putting £20,000 in the 123 account + it would mean you pay your mortgage back by almost 3 years quicker. If you paid £60k then you would your mortgage off 10 years quicker, saving yourself £40k in interest.

Seems to be a big debate on overpaying mortgage or using savers accounts. I would use the following calculators to see what works best

http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator#

http://www.moneysupermarket.com/savings/calculator/

Do First Direct or HSBC do help to buy on new houses?

I called FD today to arrange new deal. They will call me back in... two weeks.
Comparing to my old deal I should save at least £900 over next five years. After five years if everything goes well I should pay off my existing mortgage.

Thank you.

I think the broker that moneysavingexpert recommend is London and Country. They dont charge a fee as they get a back hander off the mortgage provider for your custom. They are not whole of market brokers thou. I originally asked them for advice and ended up finding a better deal that they couldnt get me.

There is only one way to find out answer to your question - ask your broker.


http://moneyfacts.co.uk/guides/mortgages/why-use-a-mortgage-broker180511/

I think you won't offend anybody if you print this deal and ask broker to try to beat it on no win no fee basis.

What about buy to let property rates please

​There is also the Nationwide Regular Saver which is also a 12 month product, it has a slightly lower rate at 5% but allows you to put more away (£500/month).

The regular saver only last 12 months then it gets transfered to your basic saver account but you can start a new one every year to get the 6% but still restricted to £3600 per annum

This looks like a good deal, so i applied today. I went for the 2.19% with £950 as it works out slightly cheaper over the term for me.

Two questions:

Are mortgage brokers / advisors likely to find a better rate, why would i pay one to research for me ?

On the phone, they said the rate is only guaranteed once you pay the booking fee. I was given the option to pay the booking fee today, but it is too early in my purchase to commit that money.

Thanks

​If you were to pay off £100 at the start of a 25 year term mortgage at 2% interest you will save a total of £64.06 interest over the 25 years. If you put the £100 in a savings account paying 6% interest you will earn £329.17 interest over the 25 years.

FD Regular Saver will give you 6% (£300/month only).

https://www1.firstdirect.com/1/2/savings/regular-savings-account


You should be better by saving in the bank for as long as they offer higher rate than your mortgage.

What's the current savings rate? Anything higher than 4% anywhere?

I've got a £140,000 mortgage and monthly payments of £600. I was thinking of overpaying by £400 every month. My rate is 3% for 10 years.

Am I better to stick my over payments in a savings account? And then pay off mortgage at the end of the 10 year term?

Sorry mate, but basic maths says you're wrong.

Doesn't matter how long or how much money is involved, it's always better to save rather than pay off debt if your savings rate is higher than your debt rate.

Of course, if your savings rate drops below your mortgage rate in 10 years time, you'd still be better off saving your money for the first 10 years and then paying off your mortgage when the rates change.

To be clear, in terms of pure numbers it is never better to pay off a mortgage when your savings rate is higher.

Genuine question but why would you not over pay on a mortgage to clear the debt quicker than stick the overpayment money in a savings account? Why would you not want to be mortgage free early?

By the way, which is the best savings account at the moment if I had £20,000 in savings? Is interest on savings paid daily or monthly?

if you work out the term over the full length it should work out cheaper in the longrun to make overpayments, unless the savings is significantly higher, if you make £100 over payment and savings of £100 and that's the only payment you make, I imagine over the course of 25 years if that £100 extra is paid to the start it would be a lot more of combined interest than you would get on that £100 for 25 years, at least, for me working it out over the full term it works better, we've almost halved our length so far, if we had put that into savings it would not equal the amount we've saved over time, although to me the biggest savings is at the start, if you've only got a few years left then I agree savings is the better way to go.

maybe we are fools and I worked it out completely wrong, but to me it makes sense to make overpayments, however I disagree with simple maths, I personally found it quite difficult to work out the totals overtime but my love of excel helped :smiley:

This looks a great deal for those needing a mortgage, just paid mine off and it feels like finding a tenner and losing a fiver??

Feeder accounts such as these are a nominal return though as max savings per annum is 3k I think on this. However 123 santander account per couple is 60k for 3%?

It all depends on your personal circumstances.
In short if you qualify for this deal it would be better to keep money in the bank than to repay mortgage.


To maximize profit multiple accounts are needed. For convenience I would recommend Santander and their 123 account.
Interest is paid monthly.

Thanks. That's what I expected. Will give them a ring tomorrow. Might have to sign a new deed. But hopefully can still turn it around by end of month.

The maths is very simple: if your savings interest rate (after income tax) is higher than your mortgage rate, you're better off putting any over payments into a savings account than paying them off your mortgage.

Doesn't matter if you've got £1 to overpay or £100,000, or if your mortgage has 25 left years or 2 months.

I'm in the process of arranging this very mortgage at a higher rate. Offer already accepred. I wonder if they will change the rate for me. Still haven't completed so could threaten pulling out I guess if they don't want to play ball. Thanks for the heads up op.

If you can find a savings account that pays interest at a higher rate than your mortgage then it is better to put the money in the savings account rather than overpaying.

As a quick example using a mortgage rate of 1.99% and a regular saver account rate of 6%.

A £1,000 overpayment on the mortgage would save £19.90 interest over 12 months, but could earn £60 a year in the savings account over the same 12 months. So you would be £40.10 better off over the year by putting the money in the savings account.

Regular saver accounts do limit how much you can pay in but you can open current accounts that pay 5% (Nationwide) and 3% (Tesco) and use these as feeder accounts for regular savings accounts that pay 6% (First Direct) and 5% (Nationwide).

Well I can only speak for myself, but I would need the entire value of my house several times over in cash for that to work out for me, at the start of our mortgage I roughly worked out for every pound borrowed it takes 2 pound to pay back,interest rates were slightly higher mind then, but overpayments can easy cut turns if thousands over the life of the mortgage

That is correct. Provided you leave a balance (within the 5 years) the mortgage will not be paid off, hence no ERC. It is also portable should you move.

Im with FD bank but mortgage with YBS. If i took this deal i could make overpayments more than the 10% per year im allowed now but never actually pay the mortgage off fully within the 5 years so no early repayment fee. Is that right?

I am with FD and I find them very dishonest with their hidden charges. You need to double check before you sign up.

The articles overcomplicate it. There is a fee for the account of £5 a month. You get cashback if you pay bills from the account. I get between £6-8 a month cashback. So the account costs me nothing to run - in fact, they pay me to have it with the cashback. I get 3% interest on every penny in the account, because I have more than £3k in there. The £9k in the article only applies if you are getting zero cashback.

It is a risk I am willing to take - now I am paying 2.69%.

BTW how to get 0.1% discount for loyal customers?

Really good deal. Heat added, but I think I will apply for 2 Year Fixed Repayment at 1.84%

Thank you.

and that's exactly what I'm also thinking too lol. In my mind they can't go down anymore unless we go to zero interest like Asia.

They don't actually offer that 10 year term anymore. It stopped 31st March, we just managed to secure it in time.

Hmmm... decisions...

Yeah all depends on where you think interest rates will be in 5. I think I'll stick with 10 don't see huge movement in 5 but when you come to renew at the 5 year mark I'm guessing it will be higher than now for the 5-10 year period.

Thanks, I'll give them I ring and go from there..

Hmmm I'm going for 10 fix with FD at 2.89.

This is a good deal though so hard to know what to do.

its 2.29% of the mortgage. If you had that much in cash you wouldnt have needed a mortgage.

See a IFA

Can IT contractors avail this offer ? Or you need to be permanent employee ?

the fact that you can make unlimited over payments is a big plus.....

So what happens at the end of the 5 years, do you get whatever rate they have then? Surely that's a big risk if you have another 17-20 years to see out?
Or it is easy and common practice to shop around and switch?

Does anyone know if FD stress test?. I really struggle getting a mortgage with 4 children (dependants) only Netwest would give us a Mortgage 18 months ago 2yr fix because they were not taking dependencies into consideration, we are now looking for new mortgage but worried we will not find one due to this. I can see Natwest just putting us on SVR..

House 270k, mortgage 145k..

Am I best setting up an account with FD and talking to them, but really need to know how strict they are?..anyone else in my boots?

You're going to have to explain that one to me - mortgage and savings interest rates are typically quoted in APR so that people on the street can make a direct comparison. Doesn't matter if the interest is calculated hourly, daily, weekly, monthly or yearly the APR is directly comparable.

This means 3.0% APR on savings with Santander is always higher than 2.29% APR on this FD mortgage interest.

Why would you make overpayments? Put the money in a Santander 1-2-3 account (you can have 3 per couple, so up to £60k interest earning) and you'll earn 3% interest on it, which is more than the interest you'd save by making over payments.

wow, how things change, good deal for 5 years. heat!

I would advise people to hold back on fixing for longer than a couple of years. Banks are increasingly offering lower rates for longer periods of time.. HSBC have recently been advertising a 10 year fix for 1.9% with no fee. When banks are offering long term low fixes, they know that rates aren't going up anytime soon.

I imagine in the short term you will be able to get a sub 2% mortgage fairly easily across the market.

Principality do decent rates atm
Can't compare like for like as they dont do 60% - but their 65% is 2.25%

Is it portable knowing First Direct NO, so be aware if you may change home in the next 5 years.

I signed up for the 10 yr TSB rate then we are done ..what a feeling ..works out £5 a month dearer than a 2 bed council house rent

There is a way round this by taking a fee free tracker for a month and then switch....although deals may change by then

Looks good will have to work out if im eligible as I hace only 6 yrs left so not much outstanding but I bank with fd so its worth a call

Great deal, thanks OP. I have just spoken to an advisor about this rate.

However note the Loyalty Rate is only available to those who already have a mortgage with FD. You do not qualify if you only bank with FD.

See HERE for details

Good deal OP, I got a 2.29% deal with Santander back in July, think I paid £600 setup fees. I get £10 cash back each month from Santander and can overpay the remaining balance by 10% each year without fees.

There have been a lot of articles written since the changes, could be you aren't affected but if you haven't seen the likes of the below might be worth checking.

http://blog.moneysavingexpert.com/2016/01/05/santander-123-fees-more-than-doubling-should-you-ditch-it/

I just completed arranging this mortgage last night - worth noting that this also includes the survey fee of £263, or you can put that towards a homebuyers or building (full structural) survey (making it 543 for a full structural).

This is the best 5 year fixed for this LTV on the market right now (unless you're borrowing more than 197,000, then it might be slightly cheaper to use FD's standard 5 year fixed at 2.19% and pay the arrangement fee - obviously always speak to an IFA!).

I'm looking for a new deal.. Have 19 yrs left.

it's like gas and electricity providers really. you (tend to) enter a term contract for a lower tarriff rate, and then re negotiate a new deal or shop around to switch upon the term ending, for a new lower rate. same with mortgages loosely speaking. it's a fair bit more complicated as you have to take into account LTV and interest rates, overpayments and all that jazz, but that's the general jjist of it. I like the HSBC tracker personally at 1.79, as I got stung at 3.49% 4 years ago when I didn't think that the rates would at stay low. although tbf, it was my first mortgage and I was looking for solidarity and consistency, which is obv the benefit of these fixed term deals. after seeing the market these last 4 years though and being passenger to the awesome lower rates, I would still choose the HSBC tracker personally.

I've already taken this deal up got 9 years left so couldn't do 10 which is a pain
My new deal starts the end of this month going to try to pay extra off
To get it gone
Mortgage free be for I'm 50 hopefully

Not really - I pay council tax, 2 mobile phone contracts, landline and sky via DD in my Santander account and get more cashback from that alone, than the £5 a month fee (i.e., they pay me for using them). And then I get 3% net + any cash back surplus. Need £3k+ in the account to get 3%.

Good for 5 years I've just signed up to a 10yr fixed at 2.9 with FD

I just took out a new 5 year fixed 90% Mortgage with FD for a "new" house. Rate was 2.99% . Best I could find. Hope this well help someone. . The customer service is great.

Id agree i got 5 year fixed for 2.42 in sept and that was best rate at time. This seems really good

are the mortgage rates going up? I'm sure this was cheaper something like 1.99% or something