Mortgage Position & Property LTV
Property
41 Walney Road, York YO31 1AH.
- Bought 23 Jul 2021 — £285,000 (Land Registry Price Paid Data; earlier sale £234,000 on 5 Jul 2019, £172,000 on 11 Oct 2007)
- Current estimate: £300,000–£330,000. 31 sales exist for this postcode; the useful comparables are:
| Address | Sold | Price | Note |
|---|---|---|---|
| 41 Walney Road | Jul 2021 | £285,000 | this house |
| 47 Walney Road | Dec 2024 | £300,000 | most recent same-street sale |
| 17 Walney Road | Sep 2021 | £375,000 | larger |
| 33 Walney Road | Aug 2023 | £500,000 | clearly a bigger/extended house |
The lender’s assumed figure on the April 2026 Nationwide product-switch illustration is £325,840 — the top of the range, and an assumed value rather than a survey.
LTV
£124,000 against the range above:
| Value basis | LTV | Equity |
|---|---|---|
| £300,000 | 41.3% | £176,000 |
| £310,000 | 40.0% | £186,000 |
| £325,840 (Nationwide’s assumed value) | 38.1% | £201,840 |
| £350,000 (Principality’s ESIS) | 35.4% | £226,000 |
All comfortably inside the 60% band — the house would have to fall to £206,667 before that threshold was breached. Because the mortgage is interest-only the balance never amortises, so LTV only improves through value growth or overpayment.
The mortgage
| Lender | Principality Building Society, account 806319008 |
| Amount | £124,000 interest-only |
| Rate | 4.40% — 2-year variable (base rate + 0.65%) |
| Monthly | £454.67 from 25 Oct 2026 (first payment 25 Sep 2026: £947.96, including £493.29 initial interest) |
| Completed | 31 Jul 2026 (solicitor’s letter; decision 19A) — redeemed Nationwide £122,618.35 |
| Term | 25 years → 1 May 2051; the £124k must be repaid then |
| Product end | 31 Aug 2028 — confirmed in the ESIS. ERC-free from 1 Sep 2028 |
| If nothing is done | reverts to 6.25% to 31 Aug 2031, then 6.80% to 1 May 2051 — £645.83/mo, +£191 |
| Overpayment | up to 10% of balance per calendar year, ERC-free (£12,400) |
⚠️ The 0.65% margin is an assumption, not a contract term. The ESIS says Principality “will respond to any change in the Bank of England’s repo rate of interest within 30 days” — a discretionary response, not a formal tracker with a fixed margin. So base + 0.65% describes what has happened, not what is guaranteed; the lender can reprice independently of the Bank Rate.
What Habito offered (all on the same £124,000, 25-year term)
| Date | Product | Rate | Monthly | Deal length | Incentives | Total cost over deal |
|---|---|---|---|---|---|---|
| 17 Mar 2026 | 2-year fixed | 4.39% | £453.63 | 24 mo | fees-assisted legals | £10,887 |
| 17 Mar 2026 | 2-year fixed | 4.79% | £494.96 | 27 mo | £500 cashback, legals | £12,864 net |
| 30 Mar 2026 | 5-year fixed | 5.13% | £530.10 | 63 mo | £500 cashback, legals | £32,896 net |
| 20 Apr 2026 | 2-year variable | 4.40% | £454.66 | 24 mo | fees-assisted legals | £10,912 |
What was taken: the 4.40% variable (20 Apr).
Product fees (from the ESIS documents attached to each recommendation)
| Offer | Product fee | One-off costs | ERC if leaving early |
|---|---|---|---|
| 4.39% fix (Nationwide) | £0 | £0 valuation, lender pays legal fees | 2% — £2,480 max |
| 4.79% fix (Principality) | £0 | £8 funds transfer, £0 valuation, £65 exit | 2% — £2,480 max |
| 5.13% fix (Principality) | £0 | £8 funds transfer, £0 valuation, £65 exit | 5% — £6,200 max |
| 4.40% variable (Principality) | £0 | £8 funds transfer, £0 valuation, £65 exit | 1% — £1,240 max |
None of the four Habito recommendations carried an arrangement fee. The cheap-looking deal with the expensive fee was the other Nationwide offer — the product switch on the existing mortgage (Apr 2026, base + 0.34% = 4.09%), which carried a £999 product fee added to the loan, taking the loan to £124,646.05.
At 4.09% on £124,646.05 the interest is £424.83/mo; spreading the £999 over a 24-month deal adds £41.63/mo, for an effective £466.46/mo — about £11.80/mo worse than the 4.40% variable, and £12.83/mo worse than the 4.39% fix. Over two years the fee costs roughly £283. A 4.09% headline with a 0.81% fee is really a ~4.49% deal.
Whether that £999 was ever charged is unresolved: Nationwide redeemed at £122,618.35 in July, which is below the £123,647.05 principal being switched — consistent with the product switch never completing (or being paid down) rather than with a fee added to the loan. Treat the £999 as the price of that product, not as money provably spent.
The 4.40% also has half the early-repayment charge of the fixes (1% vs 2%), which matters when the rate outlook says he may want to move at the product end.
What that choice has cost
The 17 March fixed was 0.01% cheaper — £453.63 against £454.66, i.e. £1.03/month, £24.72 over two years — and carried no rate risk. So the variable was not paid for with a rate discount; it bought flexibility and nothing else. Against the 4.79% fix the variable is £1,952 cheaper over the deal, so it beat the more expensive fixed comfortably.
Caveat that matters: the 4.39% fix was quoted a month before the 20 Apr recommendation, and fixed rates were moving upward into the summer. Joe’s own account (23 Oct 2026) is that he was not eligible for the Nationwide fixed in the end, so that option was never actually available — the delay story is not the story. Which means the true counterfactual is the Principality 4.79% two-year fix with £500 cashback, not the 4.39%.
Against the fix that was actually available (4.79%, £500 cashback)
| Base rate path | Variable interest | 4.79% fix, net of cashback | Variable better (+) / worse (−) |
|---|---|---|---|
| Holds at 3.75% | £10,003 | £10,389 | +£386 |
| One +25bp (5 Nov) | £10,571 | £10,389 | −£182 |
| +50bp | £11,139 | £10,389 | −£750 |
| +75bp (4.50%) | £11,708 | £10,389 | −£1,319 |
| Market OIS path | £11,878 | £10,389 | −£1,489 |
| +125bp (5.00%) | £12,844 | £10,389 | −£2,455 |
| Cuts to 3.25% | £9,176 | £10,389 | +£1,213 |
The crossover is a base rate of 3.92% — one 25bp hike is enough to flip it. Honest caveat: 4.79% was the March price. By the time Joe committed on 30 July, a two-year fix was probably nearer 5% (today’s market is 5.05%), so this table flatters the fix; against July’s actual market the variable was likely the better buy.
The market moved, and it moved hard. Moneyfacts’ average two-year fix went from 4.83% in early March to 5.78% by 1 May 2026 — roughly 95 basis points in eight weeks, as Middle East tension pushed swap rates up. By July the average was 5.46% and rising to 5.62% within a fortnight. So the 4.79% quote from 17 March had not been “missed” by a slow decision; it had been repriced out of existence across the whole market.
What was actually buyable when Joe committed: at 60% LTV the best two-year fixes were around 4.45% in early May (HSBC) and 4.40–4.50% in early August. His 4.40% variable was therefore at or below the best fixed deal on the market, with no product fee. Habito’s own 20 April email states it recommended “the lowest cost” deal among those he was eligible for — and that was this 4.40%.
The conclusion that follows: the choice was not between 4.40% and 4.79%; it was between 4.40% and whatever the market had become by then, which was worse. The cost of the delay is real but it is measured against March prices that no longer existed.
All four Habito offers were interest-only — the 4.39% ESIS states it outright (“This is an interest-only mortgage… you will still owe £124,000.00 at the end of the mortgage”) and its £453.63 payment is exactly £124,000 × 4.39% ÷ 12. So the rate comparison above is like-for-like. The repayment product was the separate Nationwide switch on the existing mortgage (Apr 2026): a variable rate tracking base + 0.34%, £999 fee, £660.36/mo — not a fix.
How much the 4.39% fix would have been worth
Same £124,000, interest-only, over the 22 months left to the product end:
| Base rate path | Your variable averages | 4.39% fix saves (+) / costs (−) |
|---|---|---|
| Holds at 3.75% | 4.40% | −£23 |
| One +25bp hike | 4.65% | +£591 |
| +50bp (4.25%) | 4.90% | +£1,159 |
| +75bp (4.50%) | 5.15% | +£1,728 |
| Market OIS path | 5.21% | +£1,898 |
| +125bp (5.00%) | 5.65% | +£2,864 |
| Cuts to 3.25% | 4.04% | −£804 |
Rule of thumb: every 25bp costs £310/year on this balance. The fix costs almost nothing if the base holds, and that is the only scenario where Joe is better off — the whole premium of the March fix was paid for by rate risk, which the market no longer expects him to win.
Most likely payment path
Central case: the 5 November hike lands (97% priced), one further 25bp follows in the first half of 2027, and nothing after that.
| Period | Rate | Payment |
|---|---|---|
| Oct–Nov 2026 | 4.40% | £454.67 |
| Dec 2026 – Jun 2027 | 4.65% | £480.50 |
| Jul 2027 – Aug 2028 | 4.90% | £506.33 |
Total to 31 Aug 2028: £11,362. Probability-weighted (97% November, then roughly 65% / 35% / 15% for successive hikes) the base rate settles near 4.29%, giving an expected payment of about £510/mo. The market’s four-hike path would end at £574. If nothing is arranged by 1 Sep 2028 the reversion rate takes it to £645.83.
Interest-only, and investing the difference
The mortgage costs £454.67/mo and repays none of the £124,000. A repayment mortgage at the same kind of rate would cost roughly £660/mo, so the strategy keeps about £206/mo invested instead. That is the real bet — the rate is the small part.
Over the next 22 months: repayment would have built £5,371 of equity, less the £999 fee = £4,372 net. Investing £205.69/mo at 7% reaches £4,813. So on a short window the two are within a few hundred pounds of each other — investing is not visibly winning yet.
Over the full term (300 months to 1 May 2051, £205.69/mo):
| Return | Pot in May 2051 | Against the £124,000 due |
|---|---|---|
| 4% | £105,751 | −£18,249 short |
| 5% | £122,490 | −£1,510 short |
| 6% | £142,542 | +£18,542 |
| 7% | £166,624 | +£42,624 |
| 9% | £230,604 | +£106,604 |
The break-even return is 5.08% a year — and it is not a fixed number. Overpaying earns the mortgage rate itself, so if the base rate rises the guaranteed alternative rises with it: at 5.55% (the OIS peak) the hurdle is 5.55%, not 5.08%. The equity premium being banked is the gap between expected returns and the mortgage rate, and it narrows exactly when rates rise. Below that the strategy does not clear the mortgage; at 7% it clears it with £42k to spare. Contributions alone total £61,707, so the plan depends on roughly £60k-£100k of growth — which is achievable, but it is a market assumption rather than a certainty, and it has to hold for 25 years, not one good decade.
What makes it comfortable is that £206/mo is the minimum: the pension-cashflow tracker shows a £1,593/month surplus and a larger difference against a repayment mortgage at the current rate. Every extra £100/mo invested cuts the required return materially.
Where it stands today (22 Oct 2026)
- Bank Rate 3.75%, unchanged since 2 Jan 2026 — so the “2-year variable” has not moved once. It is a variable rate that has behaved like a fix.
- Interest paid since completion: £1,256 over 84 days.
- A 2-year fix at ≤60% LTV averages 5.05% today (HSBC lowest at 4.96%). Joe is 0.65% under the market — £806/year, £67/month.
- Market pricing (SONIA OIS, 22 Oct): 97% chance of a hike on 5 Nov (+24bp), ~4.50% by Apr 2027, ~4.90% by Oct 2027, peaking near 5.0% early 2028. The Bank’s own survey respondents expect 3.25% instead.
5 Nov 2026 — the hike lands
- The MPC voted 8–1 to raise Bank Rate by 25bp to 4.00% (the dissenter wanted 4.25%) — the first increase in more than three years, with inflation at 3.5% and energy costs from the Iran conflict feeding through. So the central case priced at 97% on 22 Oct has happened.
- Your rate should become 4.65%, payment £480.50 — +£25.83/month, £310/year. The ESIS allows a discretionary response to repo changes within 30 days, so expect it by ~5 December; this is a reprice, not a guaranteed tracker step, so verify it on the first statement.
- The coin-flip comparison is now settled: the 4.79% fix would have been £182 cheaper over the 22 months to Aug 2028, net of its £500 cashback. That is the whole price of choosing the variable — the protection it did not buy cost about the price of a takeaway. Interest to product end becomes £10,571 instead of £10,003.
- No action. A 5.05% fix bought today costs £11,480 over the same window, so the variable is still ~£909 ahead of fixing now, and the 1% ERC (£1,240 max) swamps every scenario. Next decision point is unchanged: the product end, 31 Aug 2028, with shopping from ~Feb 2028.
Scenarios to product end (22 months, rate = base + 0.65)
| Base rate path | End rate | Final payment | Interest to Aug 2028 | vs holding 4.40% |
|---|---|---|---|---|
| Holds at 3.75% | 4.40% | £455 | £10,003 | — |
| One +25bp hike | 4.65% | £480 | £10,571 | +£568 |
| To 4.50% by Apr 2027 | 5.15% | £532 | £11,139 | +£1,137 |
| Market OIS path | 5.55% | £574 | £11,878 | +£1,876 |
| To 5.00% by Oct 2027 | 5.65% | £584 | £12,844 | +£2,842 |
| Cuts to 3.25% | 3.90% | £403 | £9,176 | −£827 |
A 2-year fix taken today at 5.05% would cost £11,480 over the same 22 months — so the market path ends about £350 worse than fixing today, and the cut path about £2,200 better. Switching costs an ERC of 1% (£1,240 max), which swamps every scenario: there is no action worth taking before the product ends.
Rate history
Maintained by ~/.hermes/scripts/mortgage-position.py (monthly cron, 1st at 08:00). A row is appended when the month turns or the Bank Rate moves; the message only fires on a move. The last two columns are the running comparison against the 4.79% fix that was quoted but not taken — positive means the tracker is ahead. The fix’s £500 cashback is not counted in these columns (it would add £500 to the fix’s side at the end).
| Date | Base rate | Your rate | Payment | Your interest to date | 4.79% fix to date | You vs the fix |
|---|---|---|---|---|---|---|
| 2026-10-22 | 3.75% | 4.40% | £454.67 | £1,256 | £1,367 | +£111 |
| 2026-11-01 | 3.75% | 4.40% | £454.67 | £1,405 | £1,530 | +£125 |
| 2026-11-06 | 4.00% | 4.65% | £480.50 | £1,465 | £1,595 | +£130 |
Monitoring — what is automated, and what is not
| When | What happens | Where |
|---|---|---|
| 1st of each month, 08:00 | Ledger row: Bank Rate, your rate, payment, cumulative interest, running comparison with the 4.79% fix | mortgage-position.md, cron 76b97b65d996 |
| Any month the Bank Rate moves | Telegram message: new rate, new payment, months left, position against the fix | Telegram |
| Every July | Mid-term review line; in July 2028, the product-end notice telling him to lock a new deal | Telegram |
| ~29 Feb 2028 | Remortgage brief with balance, LTV, reversion cost and the sequence to follow | cron e82aefa4abeb |
| Weekly from ~1 Feb 2028 | Generic shop-around alert once the window opens | renewal-watchdog.py |
Deliberately not automated: the remortgage decision itself (rates move weekly and it needs judgement), and the comparison of realised investment return against the 5.08% break-even — investment-gains-tracker carries the contribution-neutral figure, so the July checkpoint is where those two numbers get put side by side.
What would change the answer
- Base rate above ~4.50% — from there the tracker loses to fixing at today’s 5.05%, and the case for switching at the product end (rather than at any point in between) hardens.
- A fix materially below his current rate — only plausible if the market re-prices downward; watch around the 6-month window (Mar 2028).
- Overpayment is the guaranteed alternative. £12,400/yr ERC-free earns a risk-free, tax-free 4.40% (more if base rises). That is the benchmark any GIA/ISA contribution has to beat, and it requires no market call at all.
- LTV is not a constraint at 38–41%; it will not affect pricing. Value growth is the only thing that moves it, and it moves the equity story, not the monthly cost.
Related
- pension-cashflow-tracker — net worth, the repayment-shortfall maths, and the £228/month invested instead of amortising
- renewals-tracker — the product end date and the 6-month shop-around
- investment-gains-tracker — the other side of the interest-only bet
- principality-mortgage-completion-2026-07-30 — the completion letter