Mortgage Special: Time To Fix? Will Rates drop further? How to find top deals

25:31There's been some brilliant ones here. A mid-70s first wage packet,£2 on Saturday job selling coats on Leicester Market, straight to the record shop to spend£1.99 on my first vinyl album, Mike Oldfield, Tubular Bells. So happy. I mean, people are just enjoying the memory. It just, I think that's why this is good. When I wrote it, I wasn't expecting it. you've made. I wasn't expecting it to explode like this. I mean, as I say, over 2 ,233 responses on the Twitter and Facebook. You've got Twitter, I do the Facebook one. So this is one from Han, who says, first pay from a proper career. I think I treated my dad to a meal at Frankie and Benny's after months of him picking me up from work, treating me to dinner and taking me to buy groceries as I was on a super tight budget.

26:18I loved being the one to buy for him for once. Then I found he'd left me some cash just in case on my kitchen windowsill before he left. Well, when you're a dad, you're a dad, aren't you? You know, when it's your kids. It's brought back a bad memory for me. My first one, because I did a year between school and university working for my dad's scaffolding company, and it was hard work. Anyway, I cut my wages and I took my girlfriend. It's left you ripped now, Adrian, at least. I can see. I mean, look at that. Look at that figure. It's all gone. It's all my... I took my then-girlfriend for a curry in Quinton in Birmingham, and I think the restaurant's still there.

26:54And it was very nice, but I got dumped shortly afterwards. Yeah. Just shows you, doesn't it? Moving on. Let's keep the tone up. This is meant to be the jolly bit in the middle. Right, do you want to read another one? Shall we hear from Tessa? Tessa has sent us a voice note. I like our financial programme. Having someone called Tessa is quite appropriate. It is. It's an old gag. You have to be in your late 30s to 40s before you'd understand it. But well done, Tessa. We just need people to be christened ISA. Or Pep, if Pep comes on. Well, there is a Pep. Perhaps we'll get him, the great man himself, to call in one day.

27:29He seems to have a sense of Hugh, but not. Anyway, here is Tessa. Hi, Martin. It's Tessa here. My first job was at the Wimpy in Farnborough on Saturdays. It was March 1984. I was just 16. I was paid£1.10 an hour, and I spent my first pay packet on fabric at Fleet Market on my way home. I made a top and a skirt that I wore to a disco the following weekend. Happy days. Knowing how to make a top and a skirt at that age as well is pretty impressive, I think. Yeah, the game's gone. You wouldn't get youths being able to do that now. I've got Angela. I was 14 in 1972. I used to clean the bathrooms at a large hotel in Southport.

28:10I think I got about nine quid. Straight off, it's the same again, straight off to Woolworths for a record. The rest was spent going out on the weekend. It went a long day, nine quid in those days. at Craig, my first pay was£98 and I took my grandma out for lunch. Oh, God, that's so lovely. I like that. Breaking news, the dock in the pond is still there. We've had three people tell us the dock in the pond is still there. We were worried. There's a frame photo of you. I'm sure there is. Yeah. Ian got paid for... Is the Abbey Arms still there, which was the first pub I walked in, just checking, the Abbey Arms.

28:45In which way? So it's sort of on the corner around near Delamere Forest-ish. OK, the Abbey Arms. Any sightings of the Abbey Arms? Do let us know, please. Ian got paid£35 a week on YTS, bought a bus pass for£18, £10 to my mum for digs,£7 left for a chippy and the football on Saturday with my dad. Good all-round balanced spend, I'd say there, Ian. I like this one from Elizabeth. I think this is classy. I mean, this is not only you're going into a pub, Monty, with your nonsense buying a pint. But listen to this from Elizabeth. He didn't leave the pub to go into. He was in it anyway. I know. I felt like that was a closed economy.

29:22You know how you spend in the economy. They pay you and they just get more and more back all the time. Elizabeth, first pay packet, I went into a gallery I passed on the way to and from work and started to put money down on a painting I loved. It took me two months of paying some off weekly. 30 years later, it still hangs in my home. Wow, your first pay packet, you bought art. I mean, that's high culture as far as I'm concerned.

29:52Now, back to mortgages. We're talking about the fact mortgage rates have dropped below 4%. I mean, they've been below that for a time now, but the mood music in interest rates, UK interest rates, they're going down and fixed rate mortgages are already factoring in some of the predicted future rises. So many people are saying, is this the time to fix? if you're not fixed already or you're coming to an end of your deal or you've hideously moved on to the standard variable rate, which would be around 8%. Whereas the fixes we're talking about, five years in the 3.8-ish and two-year fixes, because long-term predictions are cheaper, five years are cheaper than two years, in about what's called an inverse yield curve, at about 3.9%.

30:34Jessica is another first-time buyer, saved a deposit, and wants to know, should she put this into an ISA account if she's planning to get a mortgage within the next year, or would a lifetime ISA be beneficial to put savings into or is this too late? No, this is my bag and we actually talked about it last week. So look, lifetime ISA gives you a 25 % boost if you're an 18 to 39-year-old opener who is then buying your first-time property. So you can put up to four grand a year, you get up to a grand a year from the state on top. But one of the criteria of a lifetime ISA is that you have to have it open a year before you can get the bonus as a first-time buyer, which is why I advise everyone between the age of 18 and 39 who's never owned a property to get a quid in a lifetime ISA so that you start the clock ticking and if you do want to use it later you can put the money in straight away and you could get the bonus you know pretty much straight away so the question you also have to be buying a house that costs under 450 ,000 pounds to be able to get the bonus so the question here is is the property under 450 and when you say within a year Are you talking exactly a year or are you talking it's probably going to be nine months?

31:42If you think it's going to be less than a year, what I would do is I'd open a Lysa with a pound now. I'd put the rest of your money in top savings or in a top ISA. You're probably not paying tax on your savings. I don't know. It depends. If you are, a cash ISA would work for you. Someone like Trading212 is the top paying cash ISA at the moment. and then if it turns out to be after a year when you buy the house, you can move some of the money into your lifetime ISA and get the bonus because it's been open a year. But if you're going to buy it within a year, you don't want the money in a LISA because you'd have to pay a penalty to get it out to use it on your deposit because it's within a year.

32:18So get a quid in a LISA and then move the money after a year if it's going to work for you. If it's before a year, that's why you've got the rest in normal savings or a top cash ISA because that's more flexible. Breaking news. Two, no, three texters say the Abbey Arms still open. Still in business. There you go. That's relief. Let's go to Elgin, where Jo is waiting to join us. Jo, what have you got for Martin? Hello. Hiya. I'm 56. My marriage has broken down. We're going to have to sell the marital home. I'll be lucky to walk away with about 50 grand. I've got a small inheritance coming my way, but I will need a mortgage.

32:55and my question is what are my chances of getting a mortgage at my age how long will i be able to pay it back over so i think the first thing to say is sorry to hear sorry for your stress and it's a very difficult and stressful time it's great that you're looking after the finances because some people ignore them at that time but they are crucial for you to rebuild your life and get on and get some happiness back in that life so i mean the biggest answer i'm sorry for asking you on the radio before i turn you over to monty because it's definitely one for him is we sort of need to have some idea of what income you've got coming in because that's the crucial, you know, two things you need to buy a house, you need some capital, some savings in order to build up your deposit and you've got that, but then what really counts is what can you afford, so we need a bit of a clue on that I'm afraid, you don't have to be too specific if you don't want to give it to me I've just gone back to work full time to make a mortgage more affordable so I'll be on about£28 ,000 a year I've got three pensions I know how much each of them are worth as well And what sort of value house are you looking at in the area you live in?

33:58About 150. So I'm looking at probably getting a mortgage of about 80. So you've got, on 2016, you're talking you've got a 50 grand deposit and roughly four times income on top of that. I'll have, I think I'll have about 70, 75 maybe. So you're basically looking at 70 grand deposit and three times income, gross income, roughly. That's doable. That's very doable, isn't it? That's definitely doable. In terms of how long you can take it... Did you just breathe a sigh of relief there? Yes, I did. Good, yeah. I mean, you should get a mortgage, and the age I don't think is going to be much of an issue, but I'll let Monty be more specific.

34:34Yeah, so, Jo, in terms of age, basically it depends on what you actually do for a living. I sit in my backside on an office in a job I love. Okay, well, that's great. You're in a job you love. So a lot of lenders will go up to age 70 without too many issues. You've mentioned you've got pensions, so that's another good thing which lenders will take into account. And dependent on those levels of pension income, you might be able to go up to age 75 or even age 80 and beyond, dependent on the type of lender that you go to. But some of the mainstream lenders will go up to age 75 without too much of an issue.

35:14I have spoken to a mortgage advisor and she said, well, I could take some money out of my pension. That sort of scares me because then I'm thinking I've got less to live on through that. It's one of those where I'd need to sit down and know your full details, but I wouldn't rush to take money out of your pension to do this because from what you've just explained, it doesn't sound like you need to. You don't have to go to the first mortgage broker you use either. You may want to go and speak to somebody else. And just a note on mortgage brokers. Look, as I said before, I'm generally in favour, very strongly in favour, because they know about acceptance criteria that aren't available to the public.

35:52And also, especially if you don't know what you're doing, they do know what they're doing. That's what their qualified professionals call. But how are they paid? And is that clear? So it depends. So there are fee-free brokers out there who just take commission. They will tend to walk off, hopefully, a large panel of lenders who will give them commission. But they probably won't look at the few lenders who don't pay commission on the end of that. And that is allowed. There are brokers who take a fee and commission, which can mean they're looking at a slightly wider range. And there are some brokers who will work fee only and rebate the commission for you.

36:25So there are all these different options. But even as long as you're working as a sort of an independent mortgage broker who's going cross market, even if they're not looking at every mortgage out there, that's a lot better than doing it for yourself. So you'll have to look at the fee structure. I mean, there's other questions. Are you happy to do it on the phone or do you want to do it face to face? And they can affect the fee that is being charged as well. So there are lots of different types out there. But the one big rule, the golden rule from me, you should not be paying any broker unless they get you a mortgage.

36:55You don't pay a broker to go in and talk to them and chat. I wouldn't be paying up front. You wouldn't pay up front, would you? We don't charge up front. Most don't. I mean, very few. There are some do dependent on complex circumstances. But, yeah, it really does depend. But there is certainly choice out there where you do not need to pay anybody up front until you get a mortgage. And I would always tend towards that arm. Again, I mean, look, if you're getting an£18 million mortgage that's mortgaged and secured on your shares that you happen to own in the company and stuff like that, you're probably going to need to pay for it.

37:27We're talking about standard normal circumstances here. I just...

37:34I think, if you forgive me, I think you're moving into the territory that you need to be bespoke one-on-one. and I would suggest that you need, I would go and talk to another mortgage broker and you can work out which one you prefer and who's giving you the best answers. But it's rather tough when they've done a fact find on you and we're doing a generic radio programme. It's rather tough to get into a debate over what they've said and we don't want to do that. But you're doing the right thing and the most important thing is mortgages should be available to you. Perfect, that's all I wanted to know.

38:04All right, lovely to chat to you. Good luck. Monty and I will be answering a few more of your mortgage questions later on in the podcast-only bit. Don't miss it. It's time for that. The bits I dread, frankly. We've got the theme tune ready. Play the theme tune.

38:26Yes, it's time for Money Mastermind. The current mastermind score is Mr Adrian Charles has two correct and non-wrong. He's still maintaining his 100 % mastermind record. Unbelievable. Now, just because we have Monty in the room and he's a finance professional, Monty, you cannot give him any help. I don't want eye signals. I don't want any looks. I don't want anything like that. Adrian has to live or die by his own work on this. Okay. Now, Adrian, in financial services, brand matters. Unfortunately for the UK arm of the Bank of Chile South, known as Chile S, it adopted as its logo C-H-I-L-E-S. and clearly that has deterred many people from depositing their cash.

39:11So much so that the Child's UK entity has now gone bust, though it was fully UK regulated. So Adrian, what I want to know is if a friend of yours, thinking they were being loyal to you, had deposited all the proceeds of the sale of her£500 ,000 house into the bank a few weeks ago, how much of that would be guaranteed under the UK Safe Saving Scheme? So just to reiterate,£500 ,000 from a house sale put into the bank that has now gone bust. How much is protected under the Financial Services Compensation Scheme? A. Nothing. B. £35 ,000. C. £85 ,000. D. All of it. Nothing. £35 ,000. £85 ,000. Or all of it.

40:02I know this changed, not relatively recently, but it did. I think it went up to£85 ,000. And when do you think that changed? Sometime after the financial crash, I think about 10, might be 10. Probably 2007, 2008 then. Yeah, so I think after that maybe it changed in about, I don't know, 20, 30. I don't know, but I think it's£85 ,000. Is that your final answer? That's my final answer. Just before I answer, I need to say any resemblance in this question to any real Chilean bank is purely fictional and derived solely in order to take the mickey out of Adrian. So, here we go. The financial services compensation scheme limit for when you have savings per person, per financial institution is£85 ,000 as a standard rule.

41:00But. But. There is a special little-known rule called the Temporary High Balances Rule, where you are protected up to£1 million for six months. And that includes real life events like benefits payable under an insurance policy, personal injury, compensation, disability or incapacity, claims for compensation for wrongful conviction, claims for compensation from fair dismissal, redundancy, marriage or civil partnership issues, divorce or dissolution of civil partnership, benefits payment on retirement, benefits payment on debt, benefits payable on death, a claim for compensation in respect of a person's death, inheritance, proceeds of a deceased estate held by a personal representative and real estate transactions, including selling a house.

41:50The sale was a few weeks ago. It was£500 ,000. The limit is£1 million for six months. Therefore, the correct answer is D, all of it. Play the noise. That's not the quiet noise. We'll take it. Look, that's really interesting. I can't imagine many people would know that. But it's the six months from when you deposited. So, yes, you have£1 million protection from the point of depositing the bank on the basis that it was a temporary high balance, right, for one of the reasons. Now, if you deposit the million pounds or the 500 ,000 pounds and then the bank goes bust six and a half months after that...

42:32You're not protected under the Financial Services Compensation Team. You're protected up to 85 ,000 pounds, then the standard one. Although, in general, when a bank goes bust in these countries and we haven't had it for a long time, they actually port the whole savings to elsewhere. So it's unlikely that you would lose all your money, but you're not guaranteed. The guarantee is up to 85 grand. I mean, it's worth just talking savings for a minute or two. We've been talking mortgages. But the mirror of what's happening with mortgages, you know, in mortgages, variable rates have stayed high and fixed rates are dropping.

43:05The same is happening with savings. Easy access rates, which are the variable savings rates where you can put your money in and take it out, have stayed high. The highest pair at the moment is 5.12%. It's the cash ISA actually that's from trading 212. Although actually there's a notice account with Investec 5.25 % if you have 90 days notice to withdraw your money. That's also variable. Well, I said then that Investec is the top paying notice account. Well, it's already been pulled from the market. It's now Oxbury at 5.13 % with 90 days notice. And a warning as always with savings, especially if you're listening to the podcast a decent time afterwards, even a few days, we tend to see rates change by the day.

43:49So you're best to go and check what the best rates are for the different products at the moment you're doing it rather than rely on the products I've given in here, which are just an indication of what's available. But fixed rate savings have dropped. So it's the mirror to mortgages. So if you're looking to fix right now, there are no fixes available, apart from the one that's a bit tricky, over 5%. So the question you have to decide when it comes to saving is, do I want to go for easy access savings? It's expected that the Bank of England base rate will be dropping soon, so most easy access savings will drop.

44:21The fixed rates that are available have factored in to an extent future drops, because just like with mortgages, savings fixed are based on long-term future predictions. So you might say, I could go easy access because I can get a slightly higher rate. And you might say, I'm worried those fixed rates are going to drop even further. I'm going to get them while I can access them at, you know, one year fixed monument, 4.81%, Zenith, 4.8%. So there's actually a very mirror debate going on in savings about what you should do as there is in mortgages. But most of all, and important for me, I've finally written a question difficult enough that you now have two right and one wrong.

45:00And do you want to know who'll be really, really pleased about that? Who's that? Nihal Arthanaike. Really? Who had a record of getting one in three right and I messaged him the other day to tell him that you were 2-0 up and he said, please write harder questions. OK, all right. I'm sure I'll get into negative territory before long. Just keep going there.

45:23We're heavily into Martin Lewis' time and we've got Monty too. So it's Martin and Monty and me. If you're Rance and I'm Pants, then what's Monty? I just thought of one and then realised I can't say that That would be really rude And I like Monty That was just the word that came into my head It's not a good phrase I've probably had worse, Martin Well, perhaps you can come back to us later on that one Shall we do now? Do some more mortgage questions, I think Janice, very first mortgage Is he better paying a large deposit or keeping the money in the bank And getting a bigger mortgage with lower interest rate We've sort of covered this It's a slightly different area It's about the should I hold on I mean, it's holding on and it's sort of, you know, it's less of a what you do because you're not paying more in the meantime.

46:10The interaction, the problem you hold on is what's going to happen to house prices. There's an interaction of interest rates and house prices. And because I don't give predictions, Monty. You want a house price prediction? Yeah. I totally agree with that point. That's the point I make to a lot of my clients is actually the longer you wait, it looks as if a lot of people are going to come back into the property market next year. So we do think that house prices will grow around about 3%. Well, we depend what happens in the budget, though, doesn't it? That could. Just about to say, yeah, absolutely right.

46:40The budget is the big unknown within all of this. But at the moment, there feels like we're certainly seeing more first-time buyers interested in getting involved now because there's an expectation that next year house prices will go up. So the savings you might make on mortgages might be cancelled by the increase in house prices. to get that dream home. You're going to have to borrow, so you're going to have a bigger mortgage. Correct. It's a cheaper mortgage. I mean, it's interesting. I'm always careful when I say things like this. I tend to read the runes from discussions that I have with people that I'm not able to talk about.

47:15And I certainly think there is a strong favourability for helping first-time buyers. We had it with the last government. They saw it as a political statement to help first-time buyers. We know that there's a big push in this country to build more houses. Obviously, one of the reasons house prices are so high is limited supply. So my suspicion is, and I don't know, but from conversations I've had, if there is stuff in the budget for first-time buyers, it will probably be, it's more likely to be positive than negative in terms of helping first-time buyers. OK, but that would imply house prices are coming down because that's the biggest thing to help first-time buyers.

47:48Well, no, it doesn't. That isn't the only place I'm talking about. It's putting specific products and policies in place. I mean, that's the classic thing. We live in this weird economy where for years we talk about inflation as a bad thing unless it's with houses when we suddenly go, ooh, it's a good thing. We want house price inflation in double digits. Well, it's not particularly... The only people who gain from house price inflation are the people who are downsizing, selling a bigger place and getting a smaller place. And when you're a first-time buyer, you don't gain from house price inflation.

48:17If you own a house and you're living in it, well, you don't gain from the house price inflation, especially if your next move is to trade up for a bigger place, the gap tends to grow. Why aren't offset mortgages more popular? It seems overlooked to me. Great question. I totally agree with that. There are several schools of thought here. So the offset mortgage is where you can offset if you've got£100 ,000 worth of savings, for example, and you've got a£300 ,000 mortgage, you only pay interest on£200 ,000. So they're put together. part of it is because if we're honest it doesn't really make the lenders money because they have something in the background called capital adequacy laws which they have to fulfill so it doesn't actually it's very hard for them to price and also a lot of lenders don't have the systems to actually make it work and my view is they often tend to be quite expensive so people who've got 20 30 grand's worth of savings well you might get a slightly better rate on your savings but for that You're having to pay much more interest on the rest of your mortgage.

49:19And of course, at this point in time, where we're talking mortgage rates of 3.7 % and savings rates of 5%, well, you might be better just putting the money into savings depending on the tax issue. Now, I've had so many of your mortgage questions. I just want to do a few more with Monty here now. And the first question is from Andrew. He says, my mortgage is due to renew in January. Should I let it go to the standard variable rate for a few months until interest rates drop? get a short-term mortgage hoping rates will drop, or just go for the lowest available rate in December and January. Well, I mean, going to the standard variable rate is going to cost you a fortune.

49:54You're going to be paying around 8 % with most lenders on it. Yeah, it's between about 7 % to 8 % now. Some are even up at 9.5 % still, would you believe. Horrendous. So it's really important that you don't trip onto that rate. There are several options. One is you can actually fix into a rate now, and you can still review that rate right up until about four weeks before you're due to complete. So if something better does come along, then you can do that. Or potentially you can move on to a tracker rate, variable tracker rate that has no penalties. That's what I just keeps your options. That was my thinking.

50:32I mean, if you want to play the I think interest rates will get cheaper, so I want to be on a variable rate, then you're generally going to be far better on a low tracker rate with no penalties so you can get out of it whenever you want than the standard variable rate. What type of rates are we seeing the cheapest trackers that have penalties at the moment? You're looking at around about 5.5%, 5.15 % you can get for a two-year tracker. They're a little bit more expensive with no penalties. So you're going to be paying a premium of about 1.5 % points compared to going for the cheapest fix, but you're going to be saving 3 % over staying on your standard variable rate.

51:06And are the fees expensive on those type of mortgages? Not necessarily. No, they're around about£999. So you can either pay that up front or add it onto the loan. OK, so but overall, your view, I mean, we don't know your circumstances, Andrew. We don't know why you're thinking this. There is one thing I want to say, and it's not a specific answer to what you've said, but I get this. I don't know your age, but I get this often from people, especially under 35, where people say when rates go back down, to what they should be. That's often the type of phrasing I get, when they go back down to what they should be.

51:43Because of course, between about 2008 and 2022, we saw rates, mortgage rates and UK base rates around the one percentage type amount. And there is no when they go back down to what they should be. If you take a historic look at this, over 300 years of interest rates, The period that was the anomaly was 2008 to 2022. That is the anomaly. That is the bit that doesn't fit the pattern. Where we are right now is pretty typical for interest rates. So the idea that it must go back down to where it was is not something you should be basing your thinking on. I need to be very careful. I'm not saying it won't go back down to that level.

52:24I'm saying there is no rule that it must go back down to that level because that was an anomaly. So, I mean, I can't read if there's a subtext in your question, but if you're thinking it must go back down to where it was because normal is about 1 % mortgage rates, that's not normal. That was an anomaly. There's absolutely no rhyme nor reason that it must go back down to that type of level. So rates could drop further, but we don't know how much they will or could drop. We don't know if they would bottom out at mortgage rates of 3%. or 2 % or 1%. We just don't know that. So by going onto a variable rate and paying more, you are paying more for an unpredictable potential gain.

53:11So from my perspective, I'd say staying on the variable rate and paying more for it is the riskier option. And I mean riskier in terms of more variation. Yes? Yeah, 100%. It totally depends on whether you can absorb that interest rate risk, really. there is some expectation actually that we could see a bank base rate of three and a half or three percent by the end of next year now but that can change so quickly Martin we've seen that in the past if we got I mean and this is crystal ball gazing everyone you need to understand that if we got down to interest rates of three and a half percent base rates of three and a half percent and we assume that it then flatlines, here all the assumption is in this, folks, because we're just, you know, this is podcast only, but we're just chewing the breeze now.

54:02What type of rates would you expect mortgages to be at? Because part of the reason fixes are cheaper now is because of future cuts. But if the Bank of England base rate got to 3.5 % and no more cuts were then expected, what would your guesstimate of where a mortgage rate would be at that point? So that is such a hard question, because as you said in the programme, the fixed rates are based on the future cost of funds. So ironically, even if you have a base rate at 3.5%, in five years' time, they might be predicting that interest rates will be higher than they are at that point. So therefore, five-year fixes might be higher than that.

54:42So then you'd want to be on a variable rate because then variables would be cheaper than fixes, unlike now when fixes are cheaper of variable. So if that were to happen, and we'd probably see mortgage rates drop in the interim before it got to that point. Absolutely. And so you might be down at the 3 %-ish mortgages at some point. So you have to look. You are paying, if we say you're paying a premium of 1.5 % points in order to be on a variable tracker with no penalties, well, how much are you expecting fixes to drop and how quickly in order to pay off the premium that you paid in the mean term?

55:15I mean, I think it sounds to me, crystal ball gazing, you have to make your own decision no one knows like that's quite a narrow bet you'd have to do very well to get a good gain out of that things would have to move exactly in your favor to get a good gain out of it yeah and that's part of the calculations we do with clients actually to to help them see in pounds and pence how much you actually need rates to fall by in order to win on a tracker versus say a 3.7 five-year fit and it's not just how much they fall by it's how quickly they fall. Correct. Because if you sit on that for a year, then you're going to take a long time to repay an extra one and a half percentage premium.

55:51So look, nobody knows because it's predicting the future. So it's crystal ball gazing. But that sounds quite a high risk strategy. Anonymous asks, is it worth overpaying your mortgage? I'll take this in the start, if you don't mind. Hey, it's my podcast. Right. So look, my rule of thumb is always this. At a very rough cursory glance, if your mortgage rate is higher than the after-tax amount that you can earn in savings, so you know you've got a mortgage rate at 6 % and savings of 5%, you are better to overpay the mortgage. Two caveats. One, check there are no penalties for overpaying the mortgage.

56:29Two, always give yourself an emergency fund of three to six months worth of bills put aside so that if you were to have a problem, you'd still be able to pay the mortgage because the fact you've been overpaying wouldn't stop them saying you're in arrears once you've got to that point and make sure that the overpayments count as capital repayments. They reduce what you actually owe rather than they just reduce what you're paying in future on your future monthly payments. If your mortgage rates and your savings rates are pretty close, then there are mortgage overpayment calculators out there that will calculate for you what the best return is.

57:02And actually, it tends to work out that even if your mortgage rate is slightly, I mean, a couple of, you know, 0.1, 0.2, 0.3 % cheaper than you can earn on savings, you're probably better off overpaying the mortgage and psychologically it's better to have a lower mortgage anyway. But if you've got a relatively cheap mortgage, I mean, let's say we talked about it earlier in the show, you've got a mortgage at 2%, well, you can earn 5 % in savings. Put the money in the savings until that mortgage rate goes up because you're earning substantially more saving than you are holding it in a mortgage. Remembering, though, that at the point of remortgaging, not only will using savings towards the mortgage mean what you are borrowing is lower, but it could also lower your loan-to-value ratio, which means you get a better mortgage.

57:48Have I missed anything? I thought that was really comprehensive, Martin. No, thank you very much. No, I don't think you have. Might start to do this for a living. Right, Sarah, this one's for you, definitely. I'm keeping my mouth shut. in her late 50s and has been renting with her partner since 2014. She's on a payment plan, so I presume a debt repayment plan. She's been on a payment plan for a couple of years and has managed to reduce her debt from£25 ,000 to£5 ,000 without missing a payment. So I think we have to assume it's a debt management type payment plan. She wants to know what are their chances of getting a mortgage.

58:24Her partner does have a good credit rating. So her debt management plan will mean a poor credit rating and it means a history of missing payments, one would assume. Whereas he's got a good credit rating, her debt is coming down and she's been on it for a couple of years. How will that adverse credit affect her mortgage-getting ability or their mortgage-getting ability? So there are two things there. One is in terms of the choice that they have in terms of the mortgage. So this is very much the space where specialist lenders come into play. A lot of specialist lenders that people might not have heard of, like Together or Pepper Money, these types of providers, whereby they specialise in providing mortgages for people who have had issues.

59:06Now, there's a myriad of different conditions around that. You will probably find that you won't be looking at the sub 4 % rates available if you want to do it while the payment plan is going on. In the high fours or in the fives? In the fives, I would say anything between around five and a half to maybe even seven percent, dependent on that nature of that debt and payment plan. Some lenders will prefer you to be out of that payment plan. So it might be worth waiting until that's finished. Other lenders will take a more sympathetic approach. And again, it also depends on what were the circumstances behind the debt in the first place.

59:46So, for example, if it was due to a divorce situation or a bereavement or a life event, then potentially some lenders are more sympathetic than others. So there are options out there. But be prepared. You will have to pay more. And I would also suggest, I mean, it will be quite extreme circumstances that this will work, but it's one to discuss with your mortgage broker. If your partner has the bulk of the income, right, so that your partner has the money, you know, is the bigger earner, is it possible that your partner can get the mortgage by themselves for the moment? because they will have a good credit score and they won't have any of these issues.

1:00:29So they may have access to a lower mortgage if their income is higher enough. And you don't go on the mortgage for the time being because your poor credit sort of infects both of you. So it affects both if you get the mortgage, whereas if your partner does it by him or herself, then they're doing it alone. That could work in some circumstances. Yeah, that's one of the first things we do, Martin, when we see people like this. we actually look at who's the main income earner, as you say, and it might be that the person with the good credit can afford the mortgage by themselves and then they would take the mortgage by themselves and the other one is not party to the mortgage but will have to take some advice around their rights with the property because they're not party to the mortgage.

1:01:19So it's about getting some proper independent legal advice on that specific part. Well, that's a nice detailed answer, which means I can say at the end of this, thank you for giving us the full Monty. That's Andrew Monty-Montlake, Managing Director of Coraco Mortgage Brokers. Thanks so much for joining us. It's been brilliant today. Pleasure, thank you.

1:01:41And back to this week's Tellers, which is all about what you did with your first pay packet. And we've got a few nice ones that have come in by text, although the nature of being by text is most of them are anonymous. So I've got podcast producer Simon with me. Why don't I read the first one, Simon? With my first pay packet, I went into town at lunch and bought a pair of high heels, patent leather, low rise shoe boots with tiny gold studs on them. They were beautiful and I wore them till they fell apart. Is that yours, Simon? So there we go. You can do the next one. Matt, he sent us one saying he was paid£160 for his first month at Sainsbury's.

1:02:19He spent it all on a 12-disc CD changer for his 17-year-old Fiat Uno. No regrets. 12-discs, nice. This one, my first pay packet was from Littlewood's call centre for selling fibre optic Christmas trees by Cold Calling. But I got two yellow cards during football games that week, so the entire lot went to the FA to pay for my fines. Ah, first money, straight in fines. I used to work as a football referee, and the first time I gave someone a yellow card, he told me his name was Tommy Taylor and I didn't think much of it. And then afterwards, on the way home, my dad was like, he's definitely given you a fake name to avoid the fine.

1:02:56And had he? Well, yeah, I never heard from him again. How much is a fine? Well, I mean, I was doing sort of kids football, so maybe like between 10 and 20 quid, maybe. So it's quite a lot, actually. And it puts quite a lot of power in the referee's hands. Yeah, yeah. I have to say, I didn't know that you were fined when you paid. That's, yeah. Yeah, so if you were in a bad mood that day, it's going to be quite expensive. Well, yeah, but you're already getting quite a lot of jip from the parents of the players anyway. So, I mean, you're hitting them in the pocket as well. And they were the people that paid you.

1:03:27So, you know, you didn't want to get on the wrong side of them, really. I shall move on quickly. I got this one. Hi, guys. My dad was a builder. My first job was for him cleaning the bricks. He gave me a penny a brick. Unfortunately, he also not long after bought a one-armed penny bandit. I lost a lot on that. Oh, clever dad. Clever dad. puts a, pays your penny and then gives you somewhere to spend it straight afterwards. That was Gavin from Reading. Have you got one more, I think, to finish? We got this one from Carol. In the early 90s in the French Alps, I decided to rent a small studio flat.

1:03:58I stayed up all night and read Lord of the Rings. By the morning, I could see the elves in the distant mountains. Oh, what a nice one to finish on.

1:04:09OK, podcast listeners, I'm just going to do one pod only tip this week because it's been a monster pod already. That is a reminder that it's meter reading week. Now, it used to be meter reading day when I first launched this, but I managed to crash most of the big energy firms' websites by doing so. So now I say it's meter reading week because it really doesn't make much difference. What you have to understand is next Tuesday, the 1st of October, the energy price cap that dictates the price, the vast majority of homes in England, Scotland and Wales pay for energy, will rise by 10%. So, if you don't do a meter reading and you pay by monthly direct debit, your usage is estimated.

1:04:48And it is your energy firm that, using an algorithm, will decide how much was before the price went up and how much was after the price went up. And if it estimates too much was after the price went up, you will pay more. Now, I'm not suggesting that they're trying to diddle you by doing that more. You just might fall foul of the algorithm. You might also gain from it. But the way to make it totally fair is to give a metre reading, an up-to-date metre reading, within a few days either side of the 1st of October. That way, you're drawing a line and saying all the energy before this was at the cheap rate, all the energy after this is at the more expensive rate.

1:05:28So you know you'll be charged fairly. Now, most firms, you can do it a day or two before and you can even do it a couple of days afterwards and backdate the metre reading as long as it's an honest one. Now, of course, if you've got a working smart meter, working being the operative word, you don't need to do this because your smart meter is sending in meter readings anyway. But if you don't have a working smart meter, then it's absolutely worth doing a reading right now. And just another tip, if you will have a non-smart electricity prepayment meter, I would top up now as much as you can afford.

1:06:01That's because in that very specific case of non-smart electricity prepayment meters. It's the act of topping up that tells the meter what you should be paying. So if you top up before the 1st of October, your meter will be told about the current rates and it will not update to the new higher rate until you top up again. So the longer you can run not topping up on or after the 1st of October, the longer you will usually stay on the lower rate. Now, I say usually because, first of all, Scottish Power don't allow this. And secondly, the other energy firms do have a right to claw back the difference and claw back the extra, but they generally don't do it.

1:06:43So it is not a guaranteed gain from doing it. But in most cases, apart from with Scottish Power, you are likely to gain on a non-smart electricity prepayment meter by topping up now and lasting as long as you can until you top up again. I hope that makes sense.

1:07:03That's it for this week. If you've enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast. If you didn't enjoy it, tell them you were listening to the Unmissable podcast on BBC Sounds, which looks at the Blackpool Illuminations. I used to love going to Illuminations when I was a kid. They market themselves as the greatest free show on earth. Sounds a little bit like this podcast, full of light and great entertainment, although they've got more peers. I mean, peers, that is, not Morgan. Wasn't mentioning him. We tend to put out a new episode every Wednesday. Do subscribe to keep up to date and then your pockets may just be pleased with you.

1:07:54Martin Lewis is the founder of MoneySavingExpert.com But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double-checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen. I got bills, I gotta pay.

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