MORTGAGE dilema....

kaka72

hello x
Could I pick your brains......
I have four little ones so don't get much time to sort 'stuff' out so am hoping for some great advice, here goes....

mortgage due for renewal in june....we owe £27 500 now
Have £6000 in premium bonds
Children have £5000 ( would be happy to use if necessary and repay later)
At the moment we pay £402 per month mortgage...7 years left
Husband earns £22000 also get tax credits and family allowance
should i get a fixed short term mortgage ???

Would like the mortgage gone asap but scared to use to much savings.... maybe half???...could probably afford to go to repayments of £500 per month but thats it. Husband is civil servant and although there have been job losses there is no further talk ....at the moment x

Any advice from you helpful bunch is much appreciated x

Robert_Sterling_3

A tricky one in respect of the children's £5,000.
If their money is in a savings account it will not be earning much interest. In the interest of the children and their parents it would be more efficient to pay off £5,000 from the mortgage.
What the legal and moral implications are I do not know.

getmore4less

An offset may provide the flexability you need.

You get the benigit of using the saving to reduce the mortgage costs
You still have access to the cavings if you need.

With tax credit you would probably need to keep the saving below a certain level.

Some offsets(eg Barclays there are others) give access to overpayments which gets round this issue.

dimbo61

The return on the premium bonds is rubbish at the moment so if you can pay that off the mortgage and if you can afford up the mortgage payment to £500 a month.
The effect of both the lump sum and overpaying will soon clear the mortgage hopefully before the kids start at university !!!!
See what your mortgage reverts to in June ( its on the mortgage paperwork ) dont worry if it states the mortgage goes onto the SVR CURRENTLY 6.5/7% as that was the rate when you took out the mortgage deal check the lenders current SVR and you may even save more money which you can then overpay each month.
GOOD LUCK
Leave the kids money in TAX free savings account as emergency fund.

kaka72

thank you very much...just had a call from the mortgage people....will harrass me now until I decide!!!!
Halifax have offered a 2.99 2 year fixed rate and if I drop the mortgage down to 21000 over 4 years repayments will be £475 ( approx)fees are 2.5 of the loan but an end exit fee of £275.
Wouldn't use the kids money so this might be the way to go x
Many thanks for the advice x

kaka72

dimbo61 wrote: »

The return on the premium bonds is rubbish at the moment so if you can pay that off the mortgage and if you can afford up the mortgage payment to £500 a month.
The effect of both the lump sum and overpaying will soon clear the mortgage hopefully before the kids start at university !!!!
See what your mortgage reverts to in June ( its on the mortgage paperwork ) dont worry if it states the mortgage goes onto the SVR CURRENTLY 6.5/7% as that was the rate when you took out the mortgage deal check the lenders current SVR and you may even save more money which you can then overpay each month.
GOOD LUCK
Leave the kids money in TAX free savings account as emergency fund.

That's the way to go I think...eldest is only six and I'd love the mortgage gone before they go to secondary school.....well before the university drain!!!!

dimbo61

Think carefully why just 2 years why not 4/5 to finish off mortgage!
The 2.99% rate is very good but check what the mortgage reverts too after the fix ends as you may want to stay on the SVR to clear the small amount left ( not worth paying another fee !! )
Check if you are allowed to overpay and what limits IE 10% a year !!
GOOD LUCK TO YOU AND YOUR FAMILY

kaka72

dimbo61 wrote: »

Think carefully why just 2 years why not 4/5 to finish off mortgage!
The 2.99% rate is very good but check what the mortgage reverts too after the fix ends as you may want to stay on the SVR to clear the small amount left ( not worth paying another fee !! )
Check if you are allowed to overpay and what limits IE 10% a year !!
GOOD LUCK TO YOU AND YOUR FAMILY

You are very kind and very helpful....thanks again x

lethal0r

definitely use those premium bonds to pay off the mortgage.

for most people premium bonds will equate to a very poor paying savings account.

martin has written about them on this site somewhere if you've not read it before.