Should I decrease my term?

sazzy6

I a bit of a muddle and not too sure what to do. At the moment I am over paying my Nation Wide mortgage up the maxium (£500 per month)

I still have about £300 per month spare.

However I am concerned that if I do decrease the term, thus increasing my payments, I might struggle if the interest rates go up. I can obviously reduce my over payments if times got hard but I'm not sure which would be the better way to go.

If I reduce the term I am guessing I would still be paying less interest...?

I don't know

betti911

Have you maxed out your ISA for this year? If not then I would stick the extra in that.

sazzy6

No- I haven't maxed it out (I haven't even put any in it TBH) it's just that the rates are so poor I thought it might be better off coming off the mortgage.

dimbo61

Hi if you have £300 a month spare then consider saving into a regular saver, Barclays paying 6% before TAX.
£250 a month max.
Also Barclays have the best ISA paying 3.61% at the moment
GOOD LUCK

littlemrtinkle

open a hsbc account through topcashback giving you £50 cashback

pay in 500 each month on 1st, on 2nd withdraw 250, put other 250 in hsbc regular saver.

having this bank account allows you to open a 8% regular saver

this is what i do.

CFC

Having just been through the same mindboggling kind of questions, I can assure you that you'd be best not to reduce your term, just overpay or save it and pay off a lump sum when convenient. If the worst should happen to your job, you would be in a better position.

sazzy6

Well thank you for all your advice! I think it is 100% against reducing the term!

:beer: cheers all!

SHOULDI

Have you considered the 7% Regular Saver ISA with First Direct? You can pay £300 per month into it and also it becomes an ISA therefore tax free.

It's a great time to start as it's the beginning of the tax free year.

http://www.firstdirect.com/savings/regular-saver-isa-overview.shtml

Sounds perfect in your scenario.

Good luck

dimbo61

With the HSBC and First Direct deals you have to open a current account and pay in so much each month I THINK.
I have reduced my term from 22 years to 10 years but I had some savings in my offset account to cover in case thinks got tough !
This will save me ...... Wait for it .... £50,000 in interest.

knighter

Are these regular saver rates fixed? I am normally always in favour of reducing debt before saving but this seems to good to be true.

bootman

Well I go against the grain then by saying reduce your term. I did it several times as each fixed rate came to an end with nationwide and also overpaid as much as possible each month.

As a result my mortgage ends December this year just by letting it run. I will have cleared £120K mortgage over a 6 year period by doing the reduced term bit.

Anything you overpay is held in a reserve anyway, so you can have it all back out if needs be.