Which Capital to reduce

full-time-mum

We have a mortgage that is part intrest only/endowment and part repayment..

Within the rules of our fixed rate mortgage, we can pay off 10% of the capital without penalty and we are in a position to do this.

Is it better to reduce the capital from the interest only bit or the repayment (in fact we would clear that part)?

Daft_Pegasus

Are the interest rates the same?

Welshlassie

Assuming the Interest Rates are the same, I'd clear the interest only part as it will save you more interest in the long term, however, I'd check the exact terms of the mortgage as you may find that it is 10% per part of the mortgage in which case you would be unlikley to be able to pay off the repayment part in full.

You can put the figures into the egg OP calculator and this may help you decide.

full-time-mum

Welshlassie wrote: »

Assuming the Interest Rates are the same, I'd clear the interest only part as it will save you more interest in the long term, however, I'd check the exact terms of the mortgage as you may find that it is 10% per part of the mortgage in which case you would be unlikley to be able to pay off the repayment part in full.

You can put the figures into the egg OP calculator and this may help you decide.

I've been told that the rules have changed such that I can pay off 10% of total off either or part thereof and that there wouldn't be redemption charges for clearing the repayment part.

Also annoyed to discover that at the end of the 2 years fixed, this I will have to pay not only an admin charge but also an arrangement fee (nearly £600) to fix again. :mad:

Our mortgage is small by current standards so getting on for £700 on our mortgage every 2 years is proportionally large.

full-time-mum

Daft_Pegasus wrote: »

Are the interest rates the same?

Yes. 2 parts of the same deal.

Welshlassie

full-time-mum wrote: »

Also annoyed to discover that at the end of the 2 years fixed, this I will have to pay not only an admin charge but also an arrangement fee (nearly £600) to fix again. :mad:

Search around for a better deal in 2 years time, if your mortgage is quite small, you'll probably have a good FTV to find a good deal with. You can still get deals with no arrangement fees to pay.

full-time-mum

Welshlassie wrote: »

Search around for a better deal in 2 years time, if your mortgage is quite small, you'll probably have a good FTV to find a good deal with. You can still get deals with no arrangement fees to pay.

Just beginning to look around as current deal ends in Feb - think mortgage is too small and may well be below the minimum for many deals. :mad:

I can understand what the admin fee is and why as an existing customer I still need to pay that - they still have to do some paperwork but what is the arrangement fee for? As existing customers, they know what our house is worth so no evaluations, land registery changes or solicitors fees as far as I can make out. I've been told they charge both new and old customers so as to be fair and transparent sounds like rip off your loyal customers to me but I stand to be corrected..

Welshlassie

You could always more just over the minimum amount and then just OP it staright back (subject to the terms).