have i got the right mortgage? pls help a newbie!

missindecisive

helloo! im a moneysavingvirgin..so please be extra kind to me and look after me for a while til I find my way around..

Now I know this has been talked about before..but Im thick and I just don't really understand it so talk to me in apples and oranges please!

We have an offset mortgage with First Direct, currently paying 2.50% on £77500 approx over 19yrs. We now have NO SAVINGS, our bank account is nearly always in the red..dh's wages are about £1700 per month so the account is in the black usually for only a few days and then back into the red again:o to the tune of about £700. I know this is something ive got to tackle so you'l prob see me posting on the other boards for tips and advice. We have a bills account from which I pay all the household bills and this generally has about £400 in it for most of the month,sometimes goes a bit lower but usually stays the same and thats linked to the mtg account aswell. Just recently as rates have dropped we have been over paying by about £140ish per month as I kept my repayments at the old amount when the rates dropped. Im hoping to knock a few years off the term as dh is 42 and im 39 and we would like to get rid of it sooner rather than later:rotfl: Anyway, my question is;have I got the right mortgage for us? we have a young family with 4 children and basically what comes in moneywise goes straight back out again! look forward to advice from you all.

beecher

I wouldn't think changing mortgage would be a good idea regardless of whether you're using the offset facility, as you're on a great rate at 2.5% and if you're overpaying by £140/month you'll make a dent in your mortgage, especially if rates go down further.

You're doing the right thing by overpaying and you could maybe go onto the Debt Free Wannabee forum where you can post a SOA (Statement of Affairs) to help you save money on your bills. They're really good over there and can often see areas you can save on which might not occur to you.

Good luck

dwsjarcmcd

I would agree with beecher, historically offset mortgages were more expensive, but that's not really the case now, and you won't get much cheaper that 2.5%. Just keep an eye out for when rates start to increase and for what the impact may be when you come to the end of your benefit period with FD.

Gorgeous_George

There is no pont overpaying (your mortgage) at the expense of other debts. Your overdraft rate is likely to be much higher than your mortgage.

Sort out the overdraft first and then overpay the mortgage (or save if the after tax rate is higher than your mortgage).

GG