Hoping to pay off mortgage sooner- any advice please

gilly41

Hi
My husband and I have a 20 year mortgage which comes out of the tie in period next January :j
We will then have 17 years left on a mortgage of £56,500(next years figure)- we pay capital and interest. We both had credit problems(various issues but mainly through both of us been divorced and debts etc) and therefore the mortgage is with Birmingham Midshires and we currently pay £448 per month(just gone up for last year of the 3 year period!!)
Anyhow, hubby is 47 this year and we want to get the mortgage paid off as quickly as possible.In January I was thinking of getting quotes for a 10 year mortgage(shaving 7 years off the term) and then after the 3 year period doing the same again but hoping we can then pay it off in 3 years(so total including this year would be 7 years to pay it off).
Would that be possible? Our credit score is better than it was but still not 100%- do you think we may be able to get a mortgage with one of the high street lenders in Jan?
Thanks for any advice
xx

peterg1965

Anything is possible....can i ask what your joint income is? and what can you afford to pay every month on the mortgage?

gilly41

Hi
Yes I did a SOA a while back- our joint income is 1850 approx and by the end of this year we will be Credit Card free and catalogue free(currently paying £81 CC monthly and £144 catalgue though this will be paid off by the end of March)-therefore extra money to throw at the mortgage.
xx

gilly41

Thats net income(forgot to say!)

Thefunkygibbons

Will BM allow you to make overpaymenst without penalty and do they calculate interest daily?

If so, it may be worth calculating whether to stay withem and just make the sort of overpayments that you would if it was a 10 year mortgage anyway

That would save you the hassle and costs of moving

The advantage of moving to a 10 year deal is that it would force you to make those payments

The disadvantage is that the impact of interest rate increases would be higher and it is less flexible if something goes wrong.

gilly41

Hi
Thanks for that funky. So, next year when we are out of the tie in period I could ask them if they offer a mortgage where we can make overpayments? and the benefit of this would be that if we were having a good month (hubby had got say lots of overtime) we could pay a big chunk off and if it was a bad month we could just pay the required monthly amount?
I am not very clued up with mortgages(considering i am 41 and have had one since i was 18 with first hubby) I know that I should probably know more than i do!!Since coming on these boards I am taking a much bigger interest in them and thinking of ways now that we can get this house paid off quicker!!!
xx

Thefunkygibbons

Exactly that, the 10 year deal would work if you need the pressure to be good

But it does reduce flexibility, if you can be disciplined, then leave the term along and hit it each month based on how the month has gone.

But you do need to check that overpayments are allowed (some mortgages have limits) and that interest is calculated daily so that you are getting the maximum benefit of the payments you make

bootman

Increase your payments to as much as you can a month. See how many years that brings it down to. Then make overpayments as and when you can.

I am in a 20 year mortgage fixed for 3 years. I overpay every month by the max which with my lender is £500. I have already reduced the term to 15 years in 2 and a bit years of overpaying.

When the 3 years are up I will wack up the monthly payment to as much as I can afford to again reduce ther term and overpay when I can.

gilly41

Thanks for all the advice.
I will get in touch with Birmingham Midshires and ask what they can offer me when I am out of their penalty period.
If I make a transfer to a different mortgage with them is it just a matter of them sending me out the details and us agreeing to it?
xx

Thefunkygibbons

They should have lots of flexibility, just speak to the customer retention department

If you explain what you want to do, they should give you the best advice for their own products

thriftmonster

Don't know if this helps but the Nationwide allow you tp overpay each month by up to £500 by standing order . We started out by overpaying £2o a month and have just kept increasing it as salaries went up. We now overpay by £350 a month ( soon to go up) and should have the mortgage cleared in 12.5 years instead of the actual 25 years (next year sometime!). This is a standard repayment morgage which had a discount in the first 3 years.

NB If you do overpay often they cut your repayments whenever the base rate changes, ie last time they whacked £50 a month off our repayment. We have increased the SO by the equivalent amount each time so that we are still paying the same amount each month - but more is overpayment.