Mortgage/Savings

ironman1

Hello, been reading this site for quite a while and it has really helped me.

The question i'm asking, as i'm not too clued up with these things is how do we go about overpaying our mortgage? We are currently on a 40 year fixed rate at 6.1% and end up having quite a few quid left at the end of the month which i'd rather put towards the mortgage payments.

We are 23 and have £5,000 in savings, another question I wanted to ask is what's the best thing to do with that? We have an ISA but the other savings account we have is a silly 1%, which is barely worth it.

Thanks for any advice given!

Turin_Turambar

How much is in the "silly" account, could you not put that money into your isa?
Next year you can £5k into a cash mini isa, as opposed to £3.7k now.

I'm thinking that you need ready money to access in case of emergencies etc but put any spare cash into over paying you're mortgage

ironman1

The 1% account is an online one with Halifax. The good thing is you can withdraw and put money in whenever you want.

We have the 3600 maximum in our ISA.

Yeah I want to keep back enough cash for emergencies but feel like its a waste keeping £5k in a 1% savings account, then again it would barely do anything if we put it towards the mortgage!

JayneG

Why not reduce the term of your mortgage? 40 years seems quite long and if it is now comfortably affordable you will be able to reduce the term. A phonecall to your lender will do the trick I believe.

Turin_Turambar

....or if you still want access to your money, check these websites out for the best saving accounts...

http://www.moneysupermarket.com/savings/

http://www.moneyfacts.co.uk/money/savings/1/short-term-fixed-rate-bonds.aspx

ironman1

Yeah I am going to phone them on monday. Not sure if it will cost us to change the term as its a fixed rate deal.

I wish we didn't take it for 40 years in the first place, basically got talked into it by the advisor, we were FTB and got a bit carried away

staffie1

s.h.m.w wrote: »

Yeah I am going to phone them on monday. Not sure if it will cost us to change the term as its a fixed rate deal.

I wish we didn't take it for 40 years in the first place, basically got talked into it by the advisor, we were FTB and got a bit carried away

If you got 'talked into it' you were probably mis-sold. On that basis let them charge you if they dare...!

ironman1

It's not really mis-sold, she was saying how we shouldn't look to put ourselves 'in it' and should start off with the 40 ywar option. Trouble is since we moved in we have stopped going out as much and always have about 5-900 a month 'spare'. All well and good but i'd rather be paying off the mortgage than putting it into a useless savings account.

The thing is we only bought 60% of the property so that 40 years is to pay off just over half! What we were thinking I dont know. The advisor seemed decent at the time but obviously was looking after herself.

staffie1

That sounds like a really poor deal to me. Start looking after yourself and look at options to remortgage - shorter term and lower rate. 6.1% when bank of england base is only 0.5 seems horrendous - especially as you have so much disposable income.

ironman1

We took the Mortgage out last October, when the rates were higher but I would have thought this advisor knew something about the rate dropping a couple of months later.

It is a useless deal and we didnt get enough advice to be honest, we just got messed about with the moving in dates and getting knock backs that we just got on with it. Its a joke looking back on it, im not even sure what options we have about changing the mortgage etc, I'll have to dig the paper work out.

staffie1

Yeah - get the papers out and see what it says about early repayment. Never trust advisors - they are salespeople at the end of the day. See if there's a penalty clause. Even if there is, if it's not too shocking it might be worth paying it to get out of the contract and onto something more affordable. You can then use your spare cash to really make some inroads into paying it all off much sooner - oh and save yourself a small fortune.