help need some advice on whether to start paying my mortgage off early

stolt

I currently have a a mortgage with Birmingham Midshires bank of £69999.00 it was a 25 year mortgage and we have 21 yrs left at that figure above.
I also have £25,000 loan taken out with my parents which I pay back 150.00 a month for again this went towards buying our house.

The mortgage was fixed for 5 years at 5.5% and the parents loan was suppose to charged at 1% under the bank of Englands base rate, but my dad said rather than switching payments as and when the base rate changes just to continue with the £150 payment and your pay it off quicker.

since we have moved in we have managed to do the house up and live pretty comfortably now, obviously I've since moved up in my job and money has improved.

We now find ourselves in a situation where we want to pay off our mortgage as early as possible. Although I would get early repayment penatly of £690.00 if I made overpayments before April 2007

I currently have a £3000.00 in a isa which is from the last tax year, and we also have another £6000.00 this year which we want to have two isa's one in my name and one in my wifes.

Would this be the best option, ie have isa's or would I be better off putting this money down on the mortage.
I also have the additional problem that we wanted to save for our two young daughters for univarsity, I was unsure whether to save £100 for them each or put this money towards our mortgage aswell as an additional overpayment so that we can pay it off quicker, or keep the savings going for them and reduce the overpayment.
It would be nice not to have a mortgage and with the extra £200 a month on top of our overpayment we could probably finish off the mortgage in 8 years or less which is a lovely feeling

roswell

Your Currently paying

Enter values
Loan amount £69,999.00
Annual interest rate 5.50%
Loan period in years 21
Number of payments per year 12
Start date of loan 26/01/2006
Optional extra payments £0.00

Loan summary
Scheduled payment £468.97
Scheduled number of payments 252
Actual number of payments 252
Total early payments £0.00
Total interest £48,182.06

Monthly payment £468.97
Years 21
Years 21



Loan+Interest £118,181.06

roswell

With £200 a month over payments it changes to.

Enter values
Loan amount £69,999.00
Annual interest rate 5.50%
Loan period in years 21
Number of payments per year 12
Start date of loan 26/01/2006
Optional extra payments £200.00

Loan summary
Scheduled payment £468.97
Scheduled number of payments 252
Actual number of payments 143
Total early payments £28,481.87
Total interest £25,548.46


Monthly payment £668.97
Years 21
Years 11.91666667



Loan+Interest £95,547.46

roswell

And if you paid in a bulk payment of 9000 it would change to.


Monthly payment £668.97
Years 21
Years 9.916666667



Loan+Interest £88,380.29


But you will need to find out about the early repayment charges, idealy stick the 9 K in ISA`a and save 200 a month till your outside the early repayment, or look into the feesability of changing morgage providers it may be worth while paying the early repayment charge now to save 1 years interest further down the line.

Rebob

Ask the bank if you can shorten the term of the mortgage. This is the way I got around the overpayment rule with Abbey and is worth a try.

Are you allowed to pay 10% off the balance outstanding?

Also, would your parents like their money back earlier? They mey be too polite to say.

stolt

thanks for the reples, roswell, especially all the working out, makes alot more sense to see it listed like, I think thats what we thought of ie £9000 into isa's and then next april when the there are no early repayment penalties use that as a lump sum then continue with an overpayment of £200.00 or maybe more (things might change for us again in a year)
rebob - I will ring birmingham midshires and speak to them about the shortning term knowing my luck they say no but its worth trying.
both parents are retried, and they were using my payments as some extra income each month but again worth seeing if they want to be paid off early my thought was well because they were 1% under the base rate it would be better for me to sort the mortage with the bank first.

Rebob

I agree that financially you would be better off paying it on the mortgage but just thought your parents would like you to offer. (Puts you in their good books even if they decline!)