Mortgage-Free Wannabe Welcome and Explanation

mumoftwodaughters_2

Hi, I am new to this forum. I have read the web site for a couple of years but have never used the forum.But i love reading all the posts.
I have a repayment mortgage of £81000 at a rate of 2.5% (i know I can't believe that they haven't put it up) I have a lump sum available next month of £10000. Should i put this in a savings account or should i pay it into my mortgage? I am a basic rate tax payer and my husband is a higher rate tax payer. We have no other debts and have about £2200 in an isa.At the moment I overpay the mortgage by £200 each month. The mortgage is due to run for another 11 years but I would love to be mortgage free a lot lot sooner than that. I would love to know what anyone else would do.

udydudy

mumoftwodaughters wrote: »

Hi, .......I have a repayment mortgage of £81000 at a rate of 2.5% (i know I can't believe that they haven't put it up) I have a lump su...... for another 11 years but I would love to be mortgage free a lot lot sooner than that. I would love to know what anyone else would do.

I have mentioned this before in this thread my opinion has always been never repay cheap debts if you can save at higher rates. The 2.5% that your mortgage currently is on at themoment, is it variable or the lenders SVR or a fixed rate?

Either way I would suggest putting the money in a Cash ISA savings account in both your and your husbands name. you can save a minimum of £7200 that way in this tax year. The remainder can be put in a savings account and later moved to another ISA after 6th April 2010.

The only difference your mortgage type would make is that if the 2.5% is the SVR or variable rate, I would suggest a Instant Access Cash ISA (something like first direct e-cash isa@2.75% there may be better rates somewhere else). The idea being that you earn the 0.25% tax free until your lender decides to up the rate.

If it is fixed rate mortgage then I would suggest a fixed rate cash ISA which would pay higher and the return would be higher. I believe you can get nearly 3.75% on 1/2 year fixed.

Last 5 years I have never overpaid my mortgage as even at the current 4.24% SVR my savings (over the years) generate 6.07%(Average) in a fixed rate Cash ISAs. Earning me a decent 1.83% on £40k which is £732 every year.

When I was on variable(-0.24 below base) for 5 months or so I was earning a phenomenal 5.78% earning me a nice £963 in those 5 months!!.

Sometimes not re-paying a mortgage does wonders!!!!. but it all depends on your mortgage type.

Post your mortgage details(type of mortgage, promotional period if any, etc) here and I could try to help.

foggy123

I have a repayment morgage and not tied in. I want to reduce the term of my morgage and not sure if I should stay with my current lender which is 4.99% and begin to overpay (there is no penalities for this) or if I should enter into an offset deal of 3.75%.

mondex

Ive read some good advices at Toronto Mortgage Broker on how to pay off mortgage soon:

I thought I might want to share it with you, since I found it very practical and very informative.

There are ways to reduce the number of years to pay down your mortgage. You'll enjoy significant savings by:

Selecting a non-monthly or accelerated payment schedule
Increasing your payment frequency schedule
Making principal prepayments
Making Double-Up Payments
Selecting a shorter amortization at renewal

If you talk to your mortgage broker they can help you out and find out how to pay off your mortgage faster.

I hope I am able to contribute to those who wants to finish their mortgage soon like me

serenam

We have 15k in savings and would like to know if we should pay this against our mortgage. Our mortgage interest rate is 4.5% on a repayment basis with no penalties for overpayment.
If we tie the money up, we could get probably get about 5% interest,
Please advise the best course of action

sorry this isn't really a reply, but I am new to the forum and can't find a button to hit for new thread. You sound like you know what you're doing so please feel free to advise me where to put my query, after giving your advice that is. Sorry to take up your time.
Regards

amywhittam

Correct me if i am wrong but people keep posting that if you can get a higher rate on a savings account than your mortgage rate you are better to pay into savings than over pay your mortgage. Surely this is only the case if you have the same amount of savings as you owe on your mortgage?

rowanh

Thank you, to so many people in this forum, your optimism is encouraging. I am paying off £100 a month extra in my mortgage but there is no end in site though many calcluators show me how much I am saving in the future I am having trouble getting excitied about it at this stage :-)

Ta
Rowan

firehawk87

kasper879 wrote: »

I was a client of Total Refund, Monster Claims and was strung alomg for over a year. They told me to spend on the Credit cards, as they had a 98% success rate and could tell immediately if the claim would have a green light(4 descrepencies apparently).

This was done... I paid just short of £1600.00 for 5 Claims which monster told me to pay on the credit card in question as I was now guaranteed success.

F$@1ing Idiots.... Now Informed that despite the initial promises the claims are not succesful and although I paid a refunable option they could not help and as I wouldnt receive a refund.

They Have ignored all letters etc...

I spoke to Chase Alexander Associates who explained that claims were only likely to be succesful if the lender had taken advantage of my circumstances and the initial contract mis-sold. They were able to provide closure and even better they were FREE! They discovered only 1 claim could be succesful and as a result also assistyed me with managing the increased debt I had Incurred.

If you want a service rather than a high speed chase for feedback I would suggest Checking out their website.... (www)chasealexanderassociates(.co.uk)
Professional, Thorough and in all honesty a great customer service experience(they even battled to get my refund back from Monster Claims).

I do believe that Monster Claims and Chase Alexander are the same people. I have been having alot of trouble with them for over a year now.

CathT

Hi Everyone,

I've always seen the benefits of ploughing extra cash into making overpayments but it's only now we are financial position to make some overpayments. However, i think this is helped by being on relaitvely low interest rate at the moment (3.09%)
What i'm wondering is we can probably only commit to 12 months (approx) of making the overpayments because if interest rates rise our extra cash is taken away. I wish a calculator could help you see benefits of short term (hopefully long term) overpayments.

Additionally we have around 2000 on CC on 0% due to end in Dec and pay around £250 a month as i was hoping to clear the balance. Would i be better ploughing this money into mortgage and switching cards when deal ends (hate having CC debt but hate my mortgage more!)

Currently
Mortgage 122,000 (19 years remaining) payment 690 a month
CC 2000 payment approx 250 a month

Also what's better option for overpayment? smaller standing order/or saving up what i can and making overpayments every 6 months?

Lots of questions I know but have read the threads and good advice is given here.

Many thanks

black_taxi_2

cath--id pay off cc first even thou you have 0%

o/p on mortgage monthly is best--as interest is charged daily or monthly

keep it low at first then adjust it to amount you feel comfortable to pay automaticaly each month