New Mortgage

stressedred

Hi all
Having been reading the site for the last week or so, i need to lower my out goings. My biggest outlay is the mortgage which is £883 a month.

The mortgage is fixed in two parts
pt1 £81,918 over 17yrs fixed rate 5.950% ending 2013
pt2 £26,699 over 17yrs fixed rate 6.490% ending 2017 :mad:

total monthly amount £883 a month

wondering if anyone got any advice whats the best way to go about it?
the house is valued at £145000 i owe the Halifax £108000, im self employed my wife as a steady income both with decent credit rating.
Im hoping to keep the mortgage over the same term 17 years

beecher

Your title says 'new mortgage' but if you come out of both of these mortgages early, you're likely to face hefty Early Repayment Charges.

All I can think of is approaching Halifax to see if you can go interest only for a while.

A better idea though might be to go onto the Debt Free Wannabee forum and see where you can lower your outgoings elsewhere, ie Sky/mobile phones/entertainment/groceries?

stressedred

cheers beacher

i was thinking of putting the redemption charges on top of the mortgage i already owe, then getting a new mortgage with a different interest rate. which i think will make my monthly payments cheaper

beecher

How much are your Early Repayment Charges? You need to work out what your Loan to Value will be if you put them onto your mortgage - you might be over 80% I guess? You also need to add on arrangement fees etc of at least £1000 if you don't have that money handy.

For that sort of LTV you're probably looking at a rate of around 5% for a 5 year fixed rate. Will that save you enough to make the whole thing worthwhile?

stressedred

got 4k to put on top, i got a 4% interest rate from abbey fixed for 2yrs, also gone through a broker awaiting reply though

beecher

By my calculations, you'd save £130/month, ie £3120 over 2 years, but be paying £4000 for it. So you'd be £880 less well off. You could try to find a 5 year deal so as you at least make some money out of it. I'm hoping they come down to around 4% in the next couple of months but not sure if they will for LTV of 80% or not.

Good luck with whatever you decide.

stressedred

thanks for your reply beecher, how do you work it out mortgages do my head in. the problem im having is all my out goings are exactly the same as income etc. i just need to free up a bit of money, so although in the long run ill be losing its freeing up a bit of cash.

beecher

Use

http://www.moneymadeclear.fsa.gov.uk/tools.aspx?Tool=mortgage_calculator

And remember to add the £4,000 to your mortgage amount. My calculations may well be wrong as I think I'd overdosed on cough medicine by that point yesterday

I still say going to the Debt Free Wannabee forum is a good idea as they're really great at giving ideas about how to save money. If you post a Statement of Affairs there someone might find an easy way to save £130/month on your bills, and save you from adding to your mortgage debt.

getmore4less

Have you done a full review of the finances and made sure you cannot cut back elsewhere.

Unless you can find a deal that definately saves you money even if you reduce the monthly payment a bit it does not help long term.

Do a SOA and read the Debt free wanabee for ideas on cutting back consider posting the SOA for ideas specific to your SOA.
http://www.makesenseofcards.com/soacalc.html

In many cases the mortgage is not the problem it is elsewhere so make sure you have not overlooked something, still worth reviewing the mortgage but only if you can save money otherwise you are taking on more debt which is the last thing you want to do

stressedred

cheers guys or gals