Woolwich Tracker Mtg

Sir_Numpty

Me and OH took out a £550,000 mortgage with Barclays in 2000 and subsequently switched to lifetime tracker at Barclays Base Rate +0.19% with the woolwich. Interest payments have fallen from around £32k per annum to just £6k per annum.:beer: in the last year


The mortgage is Interest only

I am 48 and OH is 46 and we have 12 years left and have saved around £150k in various ISAS and savings plan.

We went to Barclays and the financial advisor has droped a bombshell in that he calculates that we will need to save around £3k per month for the next 12 years to bring up our savings to clear the mortgage by the time I retire at 60. My wife does not work

We are concerned that whilst the mortgage is linked to Barclays base rate we dont know if it will always follow B of E and if the mortgage rate goes up to say 5% we could be paying £60k per annum in mortage payments.:eek:

We are wondering whether it is best to get a long term fixed rate at say 4% or stick with our current plans

We went and saw a independant financial advisior who suggested investing in a Treasury gilt which matured in 2020 which he said would give us absolute certainty that the capital would be there to redeem the mortgage...any thoughts.

I am paying as much as I can into AVCs so I can retire on a full pension.

Although I could afford to pay a mortgage if not all the mortgage is redeemed.

getmore4less

http://www.whatsthecost.com/mortgage.aspx shows that

£550k @1.19% £4100pm. £400k £2980pm
£550k @4,00% £4800pm £400k £3500pm

using all your ISA savings to pay off the mortgage is not a good statagy.

Some comments to think about.

I would fill the ISAs(both) and start overpaying the mortgage you want to preserve the tax free ISA funds if you can.

Will you get a pension lump sum, you want to factor that in , you need to keep that tax free so filling the ISA/savings/pension and using it to pay of debt works better than having a great wad of cash to deal with.

Pension contributions are not allways the best use of money when retirement planning. It ties the money up and reduces flexability, it is also only tax deferal not tax free.

Remember paying of a mortgage/debt is part of retirement planning it reduces the need to have more income for providing shelter(rent). if downsizing is an option be carefull of releasing a large sum that will produce taxable income.

You are better off having full ISAs(tax free income) and no mortgage than using all your ISA savings to pay off the mortgage and having taxable pension income.

If your pension is in shares and money purchase style not defined benifits you are taking risks that the pension will not reach your targets.

Also still having a mortgage funded from pension income that is taxable can be marginal saving less and paying down the debt may be a better option.

What is you target retirement income? watch out for the age allowance clawback.

Have an idea of how much income you will need in retirement if all the debts a r gone this gives you some targets, start the budget planning now.


A ballance is as much tax free income as possible no mortgage and the rest as taxable pension.

getmore4less

One other point.

Interest payments have fallen from around £32k per annum to just £6k per annum

Taken out in 2000 so say 20y total term 8 years in.
£32kpy interest is £2667pm so 5.82%

So with £550k on repayment schedule £3884pm after 8 years you would have £401,782.43 left to pay so as long as you started with no savings you are on track with £150k now.


I would consider using any savings not in an ISA or earning more than the mortgage rate to pay down the debt.

If you ISAs are also on poor rates then you could see if you can convert to an offset(barclays allow ISAs to be offset),

Not sure what the terms were on that tracker for conversion might just be a fee or it might involve a rate rise so that would be less attractive.