Some MFW questions from a confused MSE :)

kustard

Firstly, hello all - I've spent most of the afternoon trawling through recent posts and getting quite giddy at the thought of paying off my mortgage early, especially with the wealth of fantastic information available here. I'm just a bit confused as to the best approach to take, and would appreciate some advice

At the moment I'm nearly 1 year into a 5 year fixed rate deal with Scottish Widows at 6.39%. The remaining term on the mortgage is just over 27 years and its a repayment mortgage. (Originally a 30yr term on a 2yr fixed deal which came to and end last August)

My monthly payments are about £800 a month, and I'm allowed to overpay 10% of the total remaining value each year, any more than 10% is subject to a 3% 'admin' charge.

Last week I was fortune enough to be able to pay off £12,000 off the capital, leaving me with a mortgage of £111,000. I'm hoping in my next mortgage year I'll be able to overpay another 10% taking my mortgage to just under £100,000.

But, is this the best way to do things? I typed in some figures and the interest on a 27 year mortgage is much bigger than say paying off over 10 years - am I able to move to a shorter term? I asked Scottish Widows to reduce my monthly payments this time - how do they calculate how much time to shave off had I gone for a reduced term? All this stuff is what's confusing me at the moment as I want to make sure I use my money to it's full potential.

I know this is all a bit vague at the moment, but please ask if you have any questions and I'll be around to answer them (and hopefully a lot longer!)

All the best and thank you in advance

A

pixiepie99

Many lenders allow you to change the term of your mortgage for a small fee (£25-100) but you'll need to check. Make sure you can afford the increased payments though!

kustard

Guess that would be a good start - will give them a ring

StuartGMC

Kustard
Welcome; if you've been reading then hopefully you can confirm that in considering your OP you have already accounted for:
1) Your annual budget requirements for spend
2) Your annual savings requirement for holiday, replacement car, replacement white goods, TV etc
3) You are also contributing to your pension
4) You have or will soon get to an emergency accessible savings pot of 3-6-9months outgoings
5) Considered longer term savings and investments, even if the decision is not to pursue for now?

As PixiePie notes, if you choose to change the term to be shorter then you must be able to pay the new increased minimum amounts per month. Sometimes if you have addressed all above, it can be better for now to leave on the original term and simply overpay, unless the restriction on OP allowed means you are not able to take full advantage of available money?

Looking forward to hearing of your progress.