Pondering... and need a steer please?

Ms_Brush

Pondering... and need a steer please?
Hi All

I need a bit of advice.

I took a re-start mortgage with HSBC 18 months ago, fixed at 5.79% for 3 years. This was originally interest only, and I have converted part of it to repayment and either over pay by 20% on the rest or add this to savings depending what suits at the time. This arrangement suited circumstances at the time - 1/2way through sticky divorce and in temp work.

The O/s balance is £155800 and the house is worth approx £200,000 (allowing for recent price drops - was £220k in 2007). This will attract a redemption fee of around £1800. I am now permanently employed full time (job is safe) - salary approx £35k, no adverse credit, no other borrowings and around £8k savings, which I am trying to increase when I can. I am left with around £250 a month that either goes into a pot or off the mortgage (which doesnt seem to be going down very quickly!)

However, I want to start making inroads into mortgage debt quickly and now rates are significantly lower wondered whether switching to SVR on an offset is an option (I wanted to be offset before but this wasnt an option at the time). I also want to extend the house and cant do this as borrowing is already at limits and I need to reduce it quickly or save the capital to do the work (expecting this to be around £25k), but will eventually add value as it will become a 3 bed bungalow if I do the work.

Any advice that anyone can give me would be gratefully received. This whole business confuses me beyond belief so please explain in english not jargon!!!

Thanks

dimbo61

Your interest rate on the mortgage is 5.79% fixed for another 18 months so I
would just overpay the mortgage each month as you are unlikely to get a savings rate ( after tax ) that will beat that.
This also helps you build up more equity in your home.
Make sure you have 3/6 months worth of income in cash ISA,s hopefully paying a rate similar to your mortgage rate for emergencies.
It takes time to clear a £155,800 mortgage and every little helps so keep up the good work and save any extra after your £250/ month overpayments in cash ISA,s to pay for the building work.