Will £500 a Month Make a Difference?

CLAPTON

Well presumably you are paying about 550 per month (6600 per annum)

If you are only allowed to over pay by 10% in a 12 month period then you can only overpay a maximun of £660 in a 12 month period

If you dont already have an ISA then its best to save there first anyway as you can get more than 5.5%... then see what deal you can get when the fixed rate runs out.

dimbo61

No a better plan woul be to pay into an ISA first paying anything over 5.5% and as you can get 6.25/6.5% at the moment then fill CASH ISA,s first.
Then overpay by whatever you have left spare.
This may change after august 2009 when you get your next deal ( rate ? )
You can put £3600 in this tax year up to april 4th
Then start filling another ISA after april 5th then overpay.
Hope you can understand my post even I am confused !!

champers2008

Hi again

So is it basically, if I can get higher than 5.85% (sorry missed the '8' in first message) in a savings account I should put it in there? Do I leave it in there as long as it's higher than mortgage rate.

At the moment I'm paying £671 a month.

I assumed I could pay up to 10% of the total mortage off in any 12 month period, i.e. £13,752 of the £137,529 mortgage? Obviously, that's not going to happen though! :rotfl:

So will an ISA (and perhaps a savings account) be the quickest means of paying it off?

I quite liked the idea of paying the mortgage itself off - just mentally it would feel better? :j

x

champers2008

Hi again

So is it basically, if I can get higher than 5.85% (sorry missed the '8' in first message) in a savings account I should put it in there? Do I leave it in there as long as it's higher than mortgage rate.

At the moment I'm paying £671 a month.

I assumed I could pay up to 10% of the total mortage off in any 12 month period, i.e. £13,752 of the £137,529 mortgage? Obviously, that's not going to happen though! :rotfl:

So will an ISA (and perhaps a savings account) be the quickest means of paying it off?

I quite liked the idea of paying the mortgage itself off - just mentally it would feel better? :j

x

dimbo61

Any ISA paying more than your mortgage rate of 5.85% first then overpay on the mortgage ( check with lender and ask that it is taken as an overpayment off the balance )
It is nice seeing the mortgage balance coming down each month.
Come august 2009 you could change onto a repayment mortgage and reduce the term

champers2008

daft question time . . .

"check with lender and ask that it is taken as an overpayment off the balance"

don't I want them to take the overpayment off the balance to reduce the interest payments? What should I be asking for? :huh:

x

ema_o

Yes you want it taken off the balance (I'm not sure what else they could take it off)?!

If you have £500 per month put that into an ISA (paying more than the interest rate on your mortgage - I'm sure you can get over 6%). If you haven't yet opened an ISA this year you should be able to pay £500 per month without going over your ISA allowance of £3,600 for the year.

Then open a new ISA in April and continue to pay £500 per month, making sure the old and new ISAs are at the best rates you can get.

Then see what rate you get for your mortgage when you renew it and decide what to do from then.

Not sure if you pay tax, but am assuming that you do - if so you will be best off just using ISAs - if you are paying tax on your savings I doubt you will get more than 6% when you take off the tax!

mitchaa

CLAPTON wrote: »

Well presumably you are paying about 550 per month (6600 per annum)

If you are only allowed to over pay by 10% in a 12 month period then you can only overpay a maximun of £660 in a 12 month period

Is this information correct?

I believe it is 10% of the overall mortgage amount,

i.e £100k mortgage, you could max overpay by £10k.

10% of the years payments is nothing at all, perhaps only equivelant to 1 double payment per year.

esthomizzy

Also think about whether you will see your ISA as a pot of money to be borrowed from here and there or whether you promise yourself you will never touch it because it's for the mortgage and at a better rate than the mortgage is. If you will dip an ISA but you wouldn't go to the bother of trying to get cash back out of the mortgage the difference in better/less good rates might outbalance each other anyway.

I know I am always tempted to dip into ISA's because I figure I can never afford to use the limit every single year so if I borrow some for something important I can always put it back later. So I do a bit of both. I put some into cash ISA's for a rainy day which I do expect to have to use for stuff from time to time. I used what's the cost (www.whatsthecost.com) to work out what overpayments I should make for my desired term. Currently 200pcm overpayments (I'm on a repayment already) make my anticipated term just under 18 years remaining.

champers2008

Exactly, what I think

I think I'm going to have to pay the mortgage straight off, because I consider myself to be a 'professional shopper' and the only way I focus at the moment is by thinking I'm buying the mortgage (rather than the latest pair of killer shoes or bottle of vintage wine!)
I paid in my first extra £200 overpayment yesterday! :T

I'm on an interest only mortgage at the moment, but have seen some people mention off-setting? Is this a special kind of mortgage?

Does anyone know if it would be of use to me? At the end pf the day I would like to either (i) marry a millionaire or (ii) use girl power to clear my own £135,000 mortgage as quickly as possible!