My MFW plan

jeffmcc

I currently have a 25 year £100K mortgage with Woolwich (Barclays) on their Openplan Flexible Fixed.

I got the mortgage in April 2006 with a 3 year fixed rate of 4.79% moving to Barclays Base Rate + 0.95% (currently 3.95%) thereafter.

I am pretty happy to stick with the mortgage. I was thinking of moving to an offset tracker plan with the woolwich but at the moment I don't think the offers are very good e.g. Base Rate + 2.5%

With 22 years left on the term I would really like to reduce this to around 10-11 years, so I have started making overpayments. I rang Barclays to make sure the overpayments were off the capital and that this would reduce the term, rather than the monthly payments and the woman said this was the case by default. If you wanted to reduce your monthly payments or pay off the interest then you would have to request this. Is this the case?

So hopefully when I come off my fixed rate next year and my monthly repayments drop (unless the base rate rises) I can overpay even more!

I really want to clear my mortgage as soon as possible, I thought it would be something i was stuck with until I was 56!

TOPAZ_2

Best of Luck on your journey

Nice to see more new faces

Topaz

MrMicawber_2

With capital repayments (check the minimum Barclays accept as a capital repayment on your mortgage) you are usually able to have the payment reduced or reduce the term. Both have financially the same effect. There may be a charge for one or the other or both so check - in which case save longer so the payment is bigger helping to negate the proportion of the charge. (Normally the charges are not huge).

It is important to make sure that you are not going to be charged a hefty penalty for making a repayments - again, check this with your lender.

Also check when your capital repayments become effective - normally / often month end or year end so this is when to do it. Ask your lender and ask about cheque clearance.

You are doing exactly what I have been doing - it works - not too far for me I hope now - good luck

jeffmcc

MrMicawber wrote: »

It is important to make sure that you are not going to be charged a hefty penalty for making a repayments - again, check this with your lender.

Also check when your capital repayments become effective - normally / often month end or year end so this is when to do it. Ask your lender and ask about cheque clearance.

You are doing exactly what I have been doing - it works - not too far for me I hope now - good luck

Thanks, it says on my mortgage agreement i can make overpayments up to 10% of the capital in a year, so that £10K a year. Last month I simply made an overpayment of £60 just to see if it worked. My mortgage account balance (which is displayed online) went down by £60, then yesterday it went up by £318! I don't know if that is a penalty charge or just the interest. Is interest calculated and applied monthly on Barclays mortgages?

MrMicawber_2

You would need to check with Barclays but I'd suspect that the interest is being re-calced monthly. It definitely shouldn't be a penalty charge if you are allowed to pay off an extra 10k per year.

jeffmcc

MrMicawber wrote: »

You would need to check with Barclays but I'd suspect that the interest is being re-calced monthly. It definitely shouldn't be a penalty charge if you are allowed to pay off an extra 10k per year.

Cheers, I just checked the amount against last years statement and it matches up to monthly interest charge, phew!

Its a nice feeling to make overpayments

gallygirl

Hi Jeff, welcome :hello:

I think if you check your mortgage agreement you will find the interest is calculated daily but applied monthly. That means that every day makes a difference :T.

Unless you get a comparable rate the only reasons to have an offset are if you have lots of money coming & going or can make more than the 10% OP allowed. Again, check your mortgage but you'll probably find Barclays allow you to claim back overpayments if needed so you will still have the flexibility.

Although rates are falling your 4.79% is still quite competitive so you are not losing out too much. You can often reserve a mortgage 6 months in advance, so now is the time to start looking around. However, rates will hopefully be dropping again :jtoday so let the dust settle for a week or so. You need to think about what you think will happen to base rates in next few years , your guess is as good as anyones.

jeffmcc

gallygirl wrote: »

Although rates are falling your 4.79% is still quite competitive so you are not losing out too much. You can often reserve a mortgage 6 months in advance, so now is the time to start looking around. However, rates will hopefully be dropping again :jtoday so let the dust settle for a week or so. You need to think about what you think will happen to base rates in next few years , your guess is as good as anyones.

Hi gallygirl,

Thanks for your advice, I think I will stick with the current mortgage when it moves to the variable rate until decent tracker rates come back into play then move to the Woolwich Openplan OffSet, its the best offset mortgage deal i can find and being with Woolwich already it will save me a lot of fees.

Jeff