Shortening a Mortgage, how much will I save?

Kuztardd

deleted thread

adandem

I used this one and found it easy to use:
http://www.guardian.co.uk/money/mortgage-calculator
It gives you the interest paid and the amout owed over each 5 years.
Of course, you'd have to take into account that your next deal might be at a higher/lower interest rate.
We're decreasing our mortgage from 20 to 15 years with a new deal.

mizzbiz

Try this:

http://www.moneyextra.com/mortgages/calculators/overpaying-your-mortgage.php

very enlightening

blueberrypie

Kuztardd wrote: »

Can that be true..? that is loads!!!! I must be getting my maths wrong, surely
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Nope, that looks right.

It's well worth shortening the term and/or making overpayments.

puddy

sorry to cut in, but i have a query like this too.
we are moving and are porting my current mortgage. its on a fixed rate of 4.98, fixed for 10 years and i am about 8 years into it. the rest of the mortgage has 14 years from now to when its fully paid off.

the mortgage is 66k.

i have been told that when im porting it, i can make up to za 25% overpayment without incurring the ERC, so i could pay off 16k, making the mortgage 50k.

I worked out on the calculators above, that the interest saved over the 14 years would be 6k

but,,,, and sorry to be really dim here, im sure what im going to say is not right, but,,, am i paying 16k, in order to save 6k?? meaning that im 10k out of pocket? where does the rest of the money go?

(yes i know i shouldnt be let loose with my own purse)

adandem

Have you taken into account the lower monthly repayment amount?

blueberrypie

jenner wrote: »

but,,,, and sorry to be really dim here, im sure what im going to say is not right, but,,, am i paying 16k, in order to save 6k?? meaning that im 10k out of pocket? where does the rest of the money go?

Instead of looking at the interest you'll save, look at the total amount you'd have paid by the time the mortgage was paid off.

66k over 14 years at 4.98% = £546.38/month = about £92k paid in total

Take 16k off as a one-time overpayment, and continue to pay the same per month:
50k at 4.98%, paying £546.38/month -> mortgage paid off in 9 years 8 months - and about £79k paid in total (*including* your £16k overpayment)

Alternatively, take 16k off and reduce the monthly payment, keeping the mortgage over 14 years:
50k at 4.98% over 14 years = £413.92/month = about £83.5k paid in total (again, including your 16k overpayment).


All of these calculations assume that the interest rate stays the same throughout the life of the mortgage, of course - and that's unlikely to happen, but without a crystal ball, it's the best we can do. Regardless of what happens to interest rates, a lump sum payment now will save you money in the long run.

I like the Egg mortgage calculator for this kind of stuff - it's at http://new.egg.com/visitor/0,2388,3_54988--View_1028,00.html
Put in your overpayment as year 1 (it's actually year zero, but it won't let you do that, so the figures won't be exact - but it will give you the idea) and compare the two sets of figures you get.