Lump sums and mortgages

dotchas

Hi Folks,

I am after advice about my mortgage.
It is with the Woolwich ,a lifetime tracker ,currently at 1.79% (1.50% + 0.29%)
The balance is £66.600 and it has 13 years to go.
Due to a predicted endowment shortfall I have £16,000 repayment and the rest interest only.
I have a lump sum of £38,000 (payment from a endowment policy)that I want to pay to the mortgage.I have another endowment due in 4 years for £23,000 but obviously expecting a shortfall there .
I had hoped that I could reduce the term of my mortgage by keep the repayments higher. Do I just overpay or do I need to agree it with the Woolwich.I have been told there are no penalties for paying off £38,000.I have no idea how to work out the figures:o
Many thanks in advance

unite79

Simply overpay and ask them to reduce the term, not the monthly Payment!

getmore4less

Agree with above, Barclays should do that for you if you ask.

Another option might be offset if you want to keep the liquidity of the lump sum.

There may be an option(for a fee) to change the current tracker to an offset. Worth checking if this option is available
I know some tracker mortgages came with this options some were on the same rate, some were slightly higher but still may be worth it.

This would give you total flexability to overpay as much as you want when you want.

dotchas

Thanks,I see now I need to ask them to reduce the term ,I will maybe go into a branch and discuss it.
The lump sum really needs to be used towards the mortgage as it was a Critical Illness payout on my endowment.Or at the very least it needs to be safe!
Is my tracker deal a good one? Base +0.29%

m_13

Karl Jeacle's mortage calculator looks complicated but is fantastic for working things out! I think I've done this right!

Based on mortgage principal of £66,000, an interest rate of 1.79% and a term of 13 years (all as though the mortgage was starting today) paying off £38,000 during March 2009 as a lump sum will reduce the 13 years to 5 years and 3 months so your mortgage will end in April 2014. This is based on you paying the full payment requested by Barclays each month which will rise and fall with the interest rate.

In March 2013 (four years time) you will have £6,139.56 outstanding so the £23,000 will easily pay that off (if you are allowed to make further overpayments)

dotchas

Oooh thanks for that m_13!:beer:

I will double check about overpaying but that seems like the best plan.

Yipee I can be mortgage free in 4 years:j:j:j