Is it best to overpay on tracker now interest rates are low??

Beckymarshall07

Just a quickie!
Me and hubby have just bought a house at 106k. We secured a tracker with Britannia which tracks at 0.85 above base rate. We are due to make first payment on mortgage in dec.

Question is - given interest rates are low is it especially worth overpaying now (as opposed to when interests rates are a bit higher)? Obviously will try and overpay where we can but our new home needs work and its just a question of do we use extra cash for work or earmark some of spare cash to overpaying on mortgage??? Hubby is of view we make most of interest rates cuts to do up house now.
Any help appreciated - I'm rubbish with numbers! :beer:

silvercar

Question is - given interest rates are low is it especially worth overpaying now (as opposed to when interests rates are a bit higher)?

Yes, if you already have saved some rainy day money.

Yes, if there are no penalites for over paying.

Yes, if you can't get a better interest rate on your savings than you can save on your mortgage.

Yes, if you won't need to borrow elsewhere for anything else. Your mortgage rate will give you the cheapest borrowing you can probably get.

Yes, if you could be tempted to waste the money elsewhere.

baby_fuzz

I'd look around to see what rates are on savings accounts - if the interest you get is greater than you could save by paying it off your mortgage, then you'd be better of saving it.

Beckymarshall07

Hello silvercar - forgot to say we are looking to borrow 15k to do work on house. Britannia have said they wont loan to us.

chardir

Beckymarshall07 wrote: »

Hello silvercar - forgot to say we are looking to borrow 15k to do work on house. Britannia have said they wont loan to us.

If you're getting an unsecured loan for that rather than adding it to the mortgage then you should overpay the loan in preference to overpaying the mortgage.

But don't assume the mortgage rate will stay low. Make sure you can afford the loan in addition to a mortgage payment at 6 or 7%.

greytroot

Noticed my provider Chelsea is not passing on any rate reductions and instead now coming up with their own rates.

I am on a tracker at 0.51 below BoE and next year at 1.79 above BoE. So does this mean i have a bargain?! almost confused.

foreversummer

greytroot wrote: »

Noticed my provider Chelsea is not passing on any rate reductions and instead now coming up with their own rates.

I am on a tracker at 0.51 below BoE and next year at 1.79 above BoE. So does this mean i have a bargain?! almost confused.

If you are on a BofE tracker they will have to pass on rate cuts to you unless they have a collar. You may be getting confused with their standard variable rate for which they are not obliged to pass on the rate cuts.

Sounds like you have a very good deal there!