Interset Only Tracker Mortgage Should We Start Overpaying In Hope Of Getting A Bigger

QUEENY-V

Hi I am new to this so please bear with me.....
18 months ago me and my partner bought this house with an interest only tracker mortgage of £111,000 at BoE base rate +1.54. We put £14,000 deposit down to make it up to the £125,000 we paid for it. We have to stay with this for 3 years. We were first time buyers.
The rates have gone down loads as we have no stops/restrictions on how low our payments can drop.
When we first bought it we were paying over £600 a month, now we are paying just under £300 a month, and it is set to go down again in the future.
I want to know is it worth overpaying every month (if the mortgage provider allows this) to pay some money off the actual house/loan?
We are wanting to move from this house to a bigger house when the 3 years is up (in around 18 months) therefore will need a bigger mortgage if possible. Would overpaying help us to achieve this easier in any way?
I will ring the mortgage provider to find out if overpaying is allowed when I have more advice but lets say it is allowed.
Do you think we have any chance of remortgaging and getting a bigger amount so we can buy somewhere bigger/more expensive?
Also I don't understand where the £14.000 has gone as on our anual statement from the mortgage provider it says we owe nearly £111,900.
Where is the £14,000 and does that mean we already own £14,000 worth of the house (sounds dumb but I haven't a clue sorry)
Any advice is much appriciated.
Thanks very much x

beecher

The value of your house is likely to have gone down in the last 18 months so your £14,000 may have been wiped out. You're only paying the interest on your mortgage so aren't paying any of the balance off, so you'll still be at £111,900 (I presume the £900 was an arragement fee) unless you start paying it off. If you overpay by £300/month you're not going to make much of a dent in what you owe I'm afraid, and you risk being in negative equity.

If and when you move in 18 months you'll need a 10% deposit for your new mortgage so you are probably in the situation where you need to save/overpay by a lot more than £300/month.

dimbo61

To get a bigger home you need to put down a large deposit and have a good income and good credit history.
You managed to pay the mortgage when it was £600 a month so what are you doing with the £300 a month you now have extra ?
Savings rates are very poor at the moment so I would overpay by as much as you are allowed and can afford.
If you want to move to a bigger home with a bigger mortgage you should overpay now and thus prove to yourself and your lender that you can afford a much bigger mortgage PLUS you are reducing your debt and increasing the equity in your home.
Take a good look at your income/expenditure and see if you can make savings and overpay by £600/700 a month

foreversummer

Definately overpay to reduce your debt. Try to be flexible with timing on when to move to a larger property. 18 months time may be too early depending on what happens in the economy.

The main thing is you have a home, you can afford your mortgage, sounds as if you are on a good mortgage deal and you can overpay!

Enjoy your home.