Overpayment calculator - here

Luercyin

Hi,

Can anyone give me some guidance please...

Is it better to cut the length of your mortgage initially - ie now 23 years left to 18 years or overpaying every month?

regards,

Luercyin

Welshlassie

Luercyin wrote: »

Hi,

Can anyone give me some guidance please...

Is it better to cut the length of your mortgage initially - ie now 23 years left to 18 years or overpaying every month?

regards,

Luercyin

Depends. If you have penalties for overpaying then cutting the length of the mortgage will increase your monthly payment and achieve the same effect without paying the penalties although that assumes there is no/or minimal charge for decreasing the term.
On the flip side if you don't have any penalties for Overpaying then this may be the better option as you aren't committed to paying the increased amount each month that you would be should you dcrease the term.

HTH

Luercyin

Thanks Welshlassie!

We are going to remortgage at the end of the year, and are hoping to reduce our mortgage as much as possible. Atm we can overpay by upto £500 pm. OH thinks it's better to overpay than reduce from 23 years to 18yrs or similar...

bonerparte1

I have just applied to the Cheshire to extend my Mortgage term to 35 years. This might sound silly but as a result my repayments are around £130 a month lower.

I am putting this amount with some of my own money and then that is being paid off the mortgage every month which in turn is constantly reducing the monthly repayments.

Using the calculator my Mortgage will still finish far earlier than it would have originally (12 years instead of 23) but the overpayments are fairly self-funding.

It requires you to be disciplined and to carry on making the original repayment amounts but it seems to work well. As the required repayments continue to drop I am able to divert the difference to the overpayment account which is gradually allowing me to make the overpayments with less and less extra input of funds by me.

Anyone else extended their mortgage period to reduce their payments and used the difference to self finance their overpayments? I'd be interested to hear how you are getting on...

Best wishes

Dan

leaann

We have two mortgages on the go. Both repayments over the same terms - 25 years. Question is, if we get to a position where we can afford to over pay which one shall we over pay on or do we split it?
£255k at 1.24% tracker rate or £65k at 4.49%
Your thoughts and advice please.

blueberrypie

leaann wrote: »

We have two mortgages on the go. Both repayments over the same terms - 25 years. Question is, if we get to a position where we can afford to over pay which one shall we over pay on or do we split it?
£255k at 1.24% tracker rate or £65k at 4.49%
Your thoughts and advice please.

Assuming you have no other debt and that you're not getting into penalties for overpaying...the £65k. It's at a substantially higher interest rate than the £255k. If/when interest rates rise to the point where your tracker is higher than your fixed rate, that's when you'd overpay the £255k. Always pay off higher-rate debt first (while always making at least minimum payments on all debts, of course).

Not only that, but the latter is at a rate which is lower than you can earn on savings, so even if you had the £65k paid off, it would make no sense to overpay the £255k - you'd be better putting the overpayment funds into a savings account earning more (after tax) than the tracker rate, and keeping the funds to drop onto the tracker mortgage if and when the tracker rate became higher than you could earn in savings interest.

To make it clear and simple:

Pay £1k off your £65k now = in one year you've saved 4.49% of that £1k = £44.90.
Pay £1k off your £255k now = in one year you've saved 1.24% of that £1k = £12.40.
Put £1k into a savings account earning 3% (after tax) now = in one year you've earned 3% of £1k in interest = £30.

TheLearner2008

I am about to sign a mortgage for £74,995. I am going to live in the home but its for an investment mainly. The bank is lending 75%, I am paying a deposit of 5% and the builder is giving me a shared equity loan of 20%. The mortgage is £298.16 per month.

The shared equity loan is 0% APR for 5 years and then is 3% APR for the next 5 years. I must pay in lumps not monthly.

When I sell the property the developer gets 20% of the selling price (if I have not paid back the loan). If I have paid back some or all of the loan I get x% or 100% of the selling price (its based on how much equity I have).

My question: Is it better for me to overpay the mortgage every month and pay the minimum to the equity or try and pay off the equity loan as fast as possible?

EDIT: This is pre-approved - I have not signed yet so I can change this up still: Fixed for 2 years at 4.89% followed by 3.50% for the rest of the term. Repayment. 30 year term. Can overpay 10% of outstanding balance per year.

blueberrypie

TheLearner2008 wrote: »

I am about to sign a mortgage for £74,995. I am going to live in the home but its for an investment mainly. The bank is lending 75%, I am paying a deposit of 5% and the builder is giving me a shared equity loan of 20%. The mortgage is £298.16 per month.

What's the interest rate on the mortgage? Is it repayment or interest-only? What's the term (i.e. is it over 25 years or what?)

And how long are you intending to keep the property?

TheLearner2008

blueberrypie wrote: »

What's the interest rate on the mortgage? Is it repayment or interest-only? What's the term (i.e. is it over 25 years or what?)

And how long are you intending to keep the property?

This is pre-approved - I have not signed yet so I can change this up still: Fixed for 2 years at 4.89% followed by 3.50% for the rest of the term. Repayment. 30 year term. Can overpay 10% of outstanding balance per year.

It is a resident mortgage so I am obliged to live in the property so I am planning to live in it for about 1 year (at least). Then I want to let it out until its value increases enough to sell - I don't have an exact length of time - my intension is to make a bit of money and then buy a bigger place and so on. e.g. if it was worth £90k I would sell.

amanda40

I have just started on my MF Journey and was looking for a calculator that let me put in different figures every month - found this and its fab

http://www.thismuchiknow.co.uk/?p=42

I downloaded the workbook and have now saved it to my desktop to update as I go - Hope someone finds it helpful!