overpay whilst rates are low!

v.rajput

Hello again, now im stumped again...if you remember i am on .89 above base rate. Isas topped up, have savings etc and emergency fund.

I know that savings rates will pay higher than the intrest on my mortgage...but why am i thinking, "while the intrest is low, pay off a lump sum or /and overpay" therefore when rates go back up there would be less of a debt and less intrest to be paid on it?

I suppose a factor would be when my intrest is added and calculated?????

Ps could really do with a new boiler and kitchen and possibly bedroom in loft...maybe do that and haggel with builders!

redrosegirlie

I like your way of thinking very much!

I don't know when but interest rates will go higher and may be even as high as to crucify a lot of people financially.

I just hope that this doesn't happen until after 2012 as I am tied into my tracker until then

ailuro2

http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings

read this, then work out how much better off you are every month, and either overpay it to the mortgage or into a savings account before you get used to having lower monthly outgoings.....:D easy way to get more money, isn't it?

v.rajput

Hi,

thanks all, i understand all the "overpayment vs savings" and right now i would be best to save at a better rate, but what i am saying is (and of course i could be and probably am being very optimsitic)would it be wise a pay as much off the mortgage whilst the rates are low, incase, god forbid, rates shoot up soon.

get the balance down and if rates do go up to a silly amount then. therefore paying intrest on less of an amount.

im am too young to remember, but 13% in 82?

My orginal plan was that intrest gained on, the wifes and my isa, plus any intrest gained on other savings, and by reducing the 2(kids) child trust fund money. would reduced my mortgage to approx 10yrs.

However other factors are, the 3 and 1 year old will need bigger bedrooms, if we cant have a bigger house, we would like to be in a better catchment area(so would everyone).

Or we stay in our current house, buy new boiler, loft conversion or extension/ new kitchen, endless up hill battle...

Its a case of i know what do in black and white, but theres so many what ifs?

Sometimes i think(oops first mistake)and wonder what other MSavers would think if i said

"money is valueless until you spend it"

i might start that one!!

good night all

v.rajput

My theory was to pay off as much as possibel whilst rates are low, but as i have just read, as i understand it any overpayment made on my mortgage would be against the capital.

Whereas the orginal monthly payment would be part capital and part interest.


Which kinda sinks my battle ship!!

But still the money saved in the intrest drop will otherwise get spent over the christmas period anyway.