Almost Mortgage free, then darn it I buy a house - HELP

getmore4less

natman wrote: »

My partner and I have filed our cash ISA's for 2008-2009 and only earning a crappy 2.8% at present.

I agree that keeping hold of the base rate tracker is a good move and trying to get stuck into the fixed over the next three years is also a sound piece of advice. Someone advised me not to pay interest only as it may damage credit rating. so i moved the term of the tracker from 5 years, to 25 years, on the new house, and have 21 years on the fix at 4.99%

My savings of 25k includes the fix term bonds - so the 25k is the grand total of my savings, plus i have £4k floating to spend on new house if needed so I do have 29k , but 4k is the money i think i will need once i move in.

I really like the idea of offset, but with me having 25k oustanding on part one of my mortgage at 1.75% this is a decent rate to have a loan.

I suppose i would like to be mortgage free as soon as poss - but also realise i need some savings particulary in the present climate.
Just trying to do the right thing.
My partner and i feel ok, in employment, we dont work at the same place, but inthe same setor - eductaion.
I am at a high school the missus at a college.

This is what I would do assuming you go with this mortgage.

£15k off the fix, leave the £10k in bonds(emergency/disaster fund) and the £4k for things.

Use the £500 pm+ to build up some more saving, the barclays saver at 6% looks good for now or overpay the fix at 4.99%,

Part I/O is unlikely to effect the credit rating.

Does you lender offer offsets you may be able to convert the tracker into an offset along with the new borrowings(tracker) and offset your cash ISAs if it is one of the lenders that allow that (eg. Barclays) but that tracker is good so if you lose that do the calcs carefully.

natman

Hi Guys really some interesting ideas - ok here a few answers to questions.

Flexibility of the Mortgage -The tracker part is fully flexible and portable and can be paid off in full at anytime without penalty but has an interest rate of 1.5%( which i feel is great at present)
The fix is for three years and has penalties but I can over pay £499 without penalty.
My tracker deal is for the life of the mortgage - so will be 25 years ( at present)


Offest mortgage - umm yeah, thought about this quite a lot and to be honest and in theory this probably would be a fabolous product for us in the current situation, but a few reasons why i didnt where -
The future was unclear - kids, sabatical, travelling I knew i would be obsessed with saving and paying off the mortgage, and that was unfair on my wife and I's Lifestyle a few other reasons, but yeah the offest would probably work for us.

Another biggie for us we needed to complete very quickly and decided wrongly or rightly to stay with our current lender, they confirmed very quickly we could have a mortgage with very little problem and there product was ok, and it meant still having the base rate tracker at a low% rate - so some good reasons to stay. They also offered free, set up fees and valuation / home buyers survey so saved a few £ there!!

I cant pay a lump sum off the fix rate mortgage without penalty.
I could have asked for a lesser amount, but to be honest, I wanted three main things in the mortgage -
Speed of mortgage approval
Keeping my 1.5% base rate tracker
Massive amount of flexibility - with my current money, i.e keep savings or pay money off mortgae, buy car, holidays. I am currently unsure what the main focus is for the short term futuer as I have been saving up to buy a house in this area.

I initially 10 years ago had the base rate tracker i refer to outstanding for 60K, but its been really difficult to work hard to pay into that and make overpayments all the time which brings it down to its current 25k AND SAVE 25K TOO

I suppose what I am saying is the last 10 years have been save save, pay off mortgae to get me into a decent postion, which I feel I have done, so i perhaps want to live a bit now and not be tied down (monthly) to payments which stretch me all the time.

I hope that makes some sense of my decisions..........

Kaz2904

In that case, your best plan is to put any overpayments to the larger mortgage.
Maybe at the end of the fix you will revisit offset mortgages. I have to say that considering you ended up with this deal due to a bit of a rush, you've done exceptionally well to secure a comparatively low rate with no fees!
Well done you!

natman

Kaz2904 wrote: »

In that case, your best plan is to put any overpayments to the larger mortgage.
Maybe at the end of the fix you will revisit offset mortgages. I have to say that considering you ended up with this deal due to a bit of a rush, you've done exceptionally well to secure a comparatively low rate with no fees!
Well done you!

Hiya thanks for that,
I suppose I keep up to date roughly with Mortgages and things, and considering we are only borowing something like 45% of the value of the property, this allowed us to obtain 'better non fee deals'

There where better deals around, but that meant losing the base rate tracker for good, and potential delays in waiting for the mortgage offer.
I think I will over pay the larger mortgage as it is nearly 6k a year off.

I SUPPOSE I WANT TO BE MORTGAGE FREE IN 10 YEARS, WOULD LIKE TO BE IN 8 YEARS - WHEN I AM 40.

I did have the light at teh end of the tunnel, owing 25k and having 30k in savings.

Good luck to all you mortgage free wannabeeees