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Property prices & remortgaging??


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Hello, 

I hoping you savvy economical people might be able to help me with some advice?

I am certain that there will be some sort of recession perhaps Depression, which as another similar post covers a significant property bubble burst as the prices are very over inflated & combined with all this health scare stuff, properties I guess are not being sold. combined with that the deferments on mortgage payment will start showing soon so I dont see a great future for property in the next few years. 

My houses mortgage was fixed at 2.14% for 24 years and the 5 years fixed ends in July 2022. It will then go to 3.44%.
Early repayment fee is £4,645 jun - may 2020-2021 / 2,278 june 2021 - May 2022. 

I dont have a clue about this really, but my best guess is that my property would be valued over what we paid for it atm. Probbaly about £20,000 I would say. 
Also as far as I can see interest rates seem to be super low & they are just handing over money without any checks to maintain the books. 

What do I do? Do I wait until the 5 years is up or forfeit that amount for a 10 year fixed rate. 

1: Just leave it & if the interest rate is over 3.75% then just keep it running?
2: remortgage in 2022, but my house could be worth significantly less, thus meaning I owe a lot more than £4,645. 
3: Remortgage now (or even in June Next year) and make the most of a relaxed economy. 

Im guessing that interest rates will sky rocket if the economy tanks & lending will not be as laid back. 
So 3: would be preferable as the house is worth more than we paid for it. 

10 years fixed  would give me superb piece of mind even in the region of 2%. 

 

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If you're happy in your home and don't plan on moving then don't worry about it. Just keep the current mortgage until 2022. The Fed has already indicated that they won't be raising rates until at least 2022, so there is no chance the BoE will do so either.

Then when it's remortgage time I would get the best most competitive interest only mortgage available and rather than pay off the house I'd invest inside my pension & ISA allowances to both be more tax efficient and earn a better return. Over 25 years there is a tiny tiny next to zero chance that your investments will not very substantially exceed the value of the house. 

https://monevator.com/why-im-not-scared-of-my-interest-only-mortgage/

 

 

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@vand did you pay your mortgage off at one point or was that someone else I’m thinking  of on here?  I don’t have much of my residential mortgage left now - part of me says pay it off and benefit from the peace of mind of not having the mortgage (and more disposable income) but another part of me thinks I should be doing what you suggest above.

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8 minutes ago, Goldhooked said:

@vand did you pay your mortgage off at one point or was that someone else I’m thinking  of on here?  I don’t have much of my residential mortgage left now - part of me says pay it off and benefit from the peace of mind of not having the mortgage (and more disposable income) but another part of me thinks I should be doing what you suggest above.

Yes I did, but if I could do it again I would be less inclined to pay off my mortgage as quickly and more inclined to taking advantage of maxing out my pension. Fortunately I had a big jump in income in the last 3 years that allowed me to both max out my pension and throw extra cash to pay off the mortgage but there is no doubt that my plan has been suboptimal in maximizing wealth. 

 

 

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On 20/06/2020 at 17:50, vand said:

If you're happy in your home and don't plan on moving then don't worry about it. Just keep the current mortgage until 2022. The Fed has already indicated that they won't be raising rates until at least 2022, so there is no chance the BoE will do so either.

Then when it's remortgage time I would get the best most competitive interest only mortgage available and rather than pay off the house I'd invest inside my pension & ISA allowances to both be more tax efficient and earn a better return. Over 25 years there is a tiny tiny next to zero chance that your investments will not very substantially exceed the value of the house. 

https://monevator.com/why-im-not-scared-of-my-interest-only-mortgage/

 

 

Thanks that's handy. 

What would happen if I wait till 2022 and my house price goes down £30-50k what i bought it for? I live in a nice area and the houses are desirable, but I bought on a high & its very credible?? Lets pretend I remortgage at that price to interest only, will they value it at the lower rate and thats that. And if they did that and it went up £30-40k in ten years and I wanted to sell would I recoup that money or the bank?

I like the idea of maxing out a pension with investments. I could also get other property, I was considering a beach house, lock up garage type thing to start with as the initial investment is cheap & it takes very little management. 

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2 hours ago, Stacktastic said:

Thanks that's handy. 

What would happen if I wait till 2022 and my house price goes down £30-50k what i bought it for? I live in a nice area and the houses are desirable, but I bought on a high & its very credible?? Lets pretend I remortgage at that price to interest only, will they value it at the lower rate and thats that. And if they did that and it went up £30-40k in ten years and I wanted to sell would I recoup that money or the bank?

I like the idea of maxing out a pension with investments. I could also get other property, I was considering a beach house, lock up garage type thing to start with as the initial investment is cheap & it takes very little management. 

Yes it is possible that if the market goes down then your options might be more limited when it comes time to remortgage. You’ll need to keep track on the approximate value of the house. Ideally you want to keep your LTV at a comfortable level, say below 75%. Sensible personal finance means leaving yourself with a suitable margin of safety so that your plans are not thrown into disarray if things are a little tighter in the future. 

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On 20/06/2020 at 18:08, Goldhooked said:

@vand did you pay your mortgage off at one point or was that someone else I’m thinking  of on here?  I don’t have much of my residential mortgage left now - part of me says pay it off and benefit from the peace of mind of not having the mortgage (and more disposable income) but another part of me thinks I should be doing what you suggest above.

I would pay it off. Then come what may it is yours. 

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  • 2 weeks later...

 

On 21/06/2020 at 22:34, vand said:

Yes it is possible that if the market goes down then your options might be more limited when it comes time to remortgage. You’ll need to keep track on the approximate value of the house. Ideally you want to keep your LTV at a comfortable level, say below 75%. Sensible personal finance means leaving yourself with a suitable margin of safety so that your plans are not thrown into disarray if things are a little tighter in the future. 

 

On 22/06/2020 at 12:07, GoldenPhil said:

I would pay it off. Then come what may it is yours. 

thats kind of what i was thinking of doing? Possibly go on interest only release the capital, then when/if the prices slash, sell it to my sister in law at then lower rate. I assume that is illegal though & they have seen it all before?? I have an hour with a very savvy Youtube personality later. I will consult with a housing expert following that. Failing that just go interest only & make investments with the money that I am saving that produces high returns. I would certainly make more than the house in half the time!! I just looked at how much interest I was paying on the 25 year term and thought "there much be an easier way". I would rather borrow on a rental property as then at least my tenants pay the bill. 

With the released capital I was looking at an investment property of some sort as a reposition etc. 
Plus a monster box of silver 😛

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