Mortgage-Free Wannabe Welcome and Explanation

kevthepongo

Hi folks. Some really interesting stuff here but there are so many permutations. I am in a quandary. My wife and I have 15 years left on our repayment mortgage with the product up for renewal soon. Our balance is @81k with monthly payments @650 with interest rate of 5.5%ish.
One thing muddying the waters is a personal loan - balance @10k. 45 payments left @250 per month. All of this we can comfortably afford.
We thought about rolling the loan up into the mortgage on an A&L tracker 1.99% for 2 years. Obviously I am weighing up pros and cons of cutting into the equity of the house (value @170k). Looking at it, by paying @950 per month we can pay mortgage off 5 years early with potential for overpayment when able. My issue is; if we decide to move house in a couple of years, that 10k off the equity may be an issue.
Anyone care to share their thoughts with me?

chirpchirp

What's the interest rate on the 10k? When you come to remortgage they will take the mortgage and the loan into account so if the interest rate on the mortgage is lower than it would be a good idea to add it to your mortgage. This will then allow you to overpay by the amount you are saving and will lower the amount owed overall quicker than if you leave it as it is.

udydudy

Welshlassie wrote: »

Udy Martins advice is to fill your Cash ISAs each year before OPing your mortgage.

Yeah but other than Cash ISAs, my main logic is that everyone seems to be blindly followingthe debt free wannabe, but if your savings(ISA or otherwise) earns more than the mortgage is it really worth repaying?

black_taxi_2

paying off mortgage early gives extra equity every month
peace of mind
more choices workwise(less hours-change job)
more leisure time if you choose

you cant judge it on interest rates alone

you have to look at bigger picture

pie81

Udydudy, you're right in theory, but in practice it's going to be very rare that savings interest will earn you more than you are paying on a mortgage. When mortgage rates are low, savings rates are generally even lower. And then you have to factor in the tax that has to be paid on savings interest (apart from ISAs) which means you lose 20% or 40% straight away.

there may have been an exception for some people in the period when lenders got unexpectedly caught into 0.5% base rate trackers and so mortgage interest payments were very very low... but you can bet that lenders won't allow that to happen again...!

barrov

Great moneysaving thread! Thanks to Martin for starting it... :T

sapper1592

I currently have a 79000 mortgage which is 50000 intrest only and 29000 repayment.I intend to overpay £200 per month.I have 7 left on my mortgage.Will the overpayment come off the intrest only amount or the repayment part or can I chose that it comes off my repayment part. Is this a wise thing to do or not .I would appreciate any advice before I visit the Nationwide and ask them. thanks
.

mummyofonechild

Hi

I could choose which account the over payments went to.

Good Luck

powned

Yeah but other than Cash ISAs, my main logic is that everyone seems to be blindly followingthe debt free wannabe, but if your savings(ISA or otherwise) earns more than the mortgage is it really worth repaying?

Thats a good point right there

JenCarter

Am so encouraged by this thread, the trend with everyone I talk to is to spend the money that they're saving with low interest rates at present, but great to find so many like-minded folks who don't want a great big mortgage hanging round their necks for years.