We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Silly question about overpayments??

Options
Z1ppy_2
Z1ppy_2 Posts: 40 Forumite
edited 29 May 2009 at 3:11PM in Mortgages & endowments
Afternoon,

im sure this is a silly question but have to ask as its been bugging me all day!

we have two mortgages now. one for our first flat which is now rented and one for our second house (our main home)

our mortgage on the flat is £152K and would say that in todays market, a realistic price for the property assuming not a distress sale would be around £145 / 155. (nothing similar has sold since 2007)

We bought out home in september 08 for £262k with a mortgage of £222K and for what its worth, have made many improvements to the house. 3 bathrooms, kitchen and conservatory. we see us as being in this house for at least a 10 year hence not being too concerned about the current market price of the place.

knowing the flat is more than likely to be in NE, we have put aside 50K cash to increase our equity if we need to but have put this against out home in the form of an overpayment (nationwide). rather than reduce monthly payments, we are keeping payments the same and reducing the term (from 35 years to 17yrs 3 months so far!)

at some point, we may have to remove 50K of the overpayments made to the house mortgage to put into the flat to increase equity which will obviously have a negative effect on the term of the house mortgage but if we do that, will it actually have saved us any money?????

sorry if this is a dumb question but i am sitting here drugged up to the eyes after an operation and i cant get my head around it!!

many thanks
MFWannabe2010 #114: Target £40,000 for 2010

Overpaid to date...
[STRIKE]£25,500[/STRIKE]
£26,000

Comments

  • TEDDYRUKSPIN
    TEDDYRUKSPIN Posts: 1,528 Forumite
    Can you check your english again please! I think I get what you mean but some sentence mistakes.

    Where did you get the 50k from? From the equity of your current home or do you have this in cash?
    Motto: 'If you don't ask, you don't get!!'

    Remember to say thank you to people who help you out!

    Also, thank you to people who help me out.
  • Z1ppy_2
    Z1ppy_2 Posts: 40 Forumite
    edited 29 May 2009 at 3:34PM
    sorry!!!

    the 50K overpayment was cash. in reality, since we bought our home, we have been working hard to make as many overpayments as possible and at the moment, this is £53,000 total.

    the 50K has always been set aside to improve the equity for the flat but our home mortgage is a 6.58% fixed for 2 years so makes sence to place the money against this mortgage rather than against the flat mortgage which is only 2.5% variable (nationwide BRM) and also eases tax implication for the rental income on the flat.
    MFWannabe2010 #114: Target £40,000 for 2010

    Overpaid to date...
    [STRIKE]£25,500[/STRIKE]
    £26,000
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.7K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.