Tracker mortgages - will you keep paying the same when interest rates drop?

amazamum

We are on a tracker currently 0.49% above bofe base rate so ours is 1.99%.
Every time the interest rate changes we get a letter to say that our payments have gone down + I have to phone them up to keep them at the same level.
So we are currently over paying by about 170 pounds compared to when we remortgaged a year ago really by doing nothing.
Just hope I can get a decent deal when the tracker deal finishes in Dec.

phizzimum

We're still paying the same amount that we were when our rate was 7 %. I really don't know what our payment should be, but we're glad to be able to use this drop to make some inroads into the mortgage

matthew74

Kept our payment the same - now overpaying to the tune of over £400 a month, will pay off a lump sum before current deal ends also.

RosieTiger

added to the overpayment each time it's fallen - if you have been surviving OK without this when interest rates were higher, try to keep paying the same figure.
Of course that depends on your financial position - if you need to use the extra you should. I don't believe in OPing at the cost of everything else.

never_too_old

that is what i am trying to do,also they will go up and then you have to find that money again.whilst we are both working and bringing in enough money to cop on id rather overpay but def not at expense of everthing else

ailuro2

phizzimum wrote: »

We're still paying the same amount that we were when our rate was 7 %. I really don't know what our payment should be, but we're glad to be able to use this drop to make some inroads into the mortgage

wow, that's fantastic - you're likely overpaying by hundreds of pounds a month!!

Have you thought of phoning your provider to ask how much is in your overpayment fund, it would help you work out a mortgage free date!?

StrawberryJam_2

I have a tracker at BOE + 0.24% however refuse to overpay direct into the mortgage more than the minimum requirement. I have better net interest in my savings account and cash isa. so all my wannabe overpayments are going to put to savings accounts. If and when that time comes when my Mortgage rate rises above my net savings rate I will then deposit my 'saved' overpayments into my mortgage. In effect I am paying the same per month as per last year + overpayment, but it is going to my savings, and my mortgage is receiving the minimum requirement.

In December I went to my lender looking to release £5k equity from my mortgage, just to test the water and see if I could, I was not allowed to take this on my mortgage t&cs and could only take out a personal loan at a much higher interest rate. This in itself is a warning!! So my advice is to pay the minimum requirement, the now 'extra' cash and and any overpayments shall go to your savings account as long as the net savings rate is higher than your mortgage rate.

Remember that you have 1 mortgage account + your 1 or 2 or 3 savings account all = to pay your mortgage, but also allowing some flexibility to access cash without a personal loan.:beer: I think the goal of mortgage free will be reached quicker on this basis/

ailuro2

SJ - you're right, this exactly what we've done. It IS more complicated to add money to a savings account every month instead of one phone call asking the bank to keep the payment rate at £xxx pounds. For some people who would be tempted to spend the money otherwise, it's good to 'hide' it away in an overpayment fund and watch the mortgage balance shrink - easier than watching money mounting up and then trying NOT to take the kids to Disney with it.

If you can find a good savings rate it can be worth it, while mortgage interest rates were higher we 'saved' in our mortgage, then took the 'savings' money out and put it into higher interest accounts when interest started to drop.

jenhugs

We are on a base rate tracker and our current interest rate is 1.74%, we like many others on here have just kept our mortgage payment the same. Think we are now overpaying by about £300 a month. Our goal is for the mortgage to be cleared by the age of 40 9 years to go or maybe less.

TotallyBroke

My interest rate is 0.19% above. I'm also only on interest only at the moment. So I'm using the spare cash to get rid of all my other debts then when I'm debt free I'll start overpaying on the mortgage to become mortgage free.