Karmacat: To Infinity And Beyond!

Karmacat

Wol2 wrote: »

Hi KC

Just popped on in response to your PM... Thank you!

I too would pay off the loan as it would not only free up the monthly cashflow but also improve your credit rating. Surprisingly, my credit rating is really good - I checked it out a couple of years ago on one of those free trials, and it was 980/1000

You plan to sell the house and will therefore have to pay off the mortgage this year - and from what I understand, you are planning to be in a position where you don;t need another mortgage to buy a new house. Erm .... I was ..... that lovely house I posted a couple of weeks ago - this one http://www.rightmove.co.uk/property-for-sale/property-14781096.html - is still for sale, its in the right area, right layout, one of the nicest on there.

If I take that £20k out of the property and put it to France, then the mortgage will stay as it is now. Which isn't huge, it has to be said - I could cover the mortgage interest from dfw work quite easily.

So all in fact you;re doing is transferring the loan debt to the mortgage, but paying less interest, and reducing the amount of cash you will have available when you sell/purchase by £3705 - yes! thats it :j

(although if you plough the £157 per month back into overpaying the mortgage over the next few months then your 20k pot to go towards the French mortgage would stand at about £17,300) I'm struggling with that, Wol, I don't understand, sorry

(Of course there is another option - the MBNA super balance transfer -but for a 4% fee so would cost about £150 - you pay off the loan and transfer it to a 0% for 13 months with minimum payment each month - keeps your mortgage overpyament intact and the £157 goes to reduce the balance on the CC each month. You then pay off the residue either when you sell or once the 13 months is up)

Is there a penalty for paying of the loan early? of some description. I'll post quotes in a min.

xx

Thanks for this ! :kisses3:

Karmacat

Aargh, the site is going a bit crazy today, I just lost a huge post....

Karmacat

Settling your credit agreement early
You can settle this agreement at any time by giving us notice in writing and paying off the amount you owe. If you wish to settle early, you should contact us for a final settlement figure.

Making extra payments to your loan
You can make overpayments at any time. Your monthly payment will not reduce and the total amount of interest paid will remain the same unless you settle your loan in full. As overpayments reduce your outstanding balance will reduce in line with any overpayments made. If you do pay off the loan early, you may be entitled to a rebate of interest, which is calculated using the formulae prescribed by the Consumer Credit Act 1974.

Aha! The two bits in bold in the above paragraph say it all. The first one seems to be the actual situation; the second seems to be them safeguarding themselves. But it sounds like I might well have to pay more than the capital balance outstanding

As at 18 March 2010:
capital balance: £3,705.83.
account balance: £3,914.25.
interest paid during March: £16.67.

Heellllp

EssexHebridean

OK - unless things have changed since I did mine, the situation SHOULD be something like this:

Do NOT overpay - there is no advantage to doing so as the interest you pay overall will remain the same - ie, they do not refund any of the calculated interest in spite of the fact that they are getting their money sooner. You need to write to them for a settlement figure, which, when it arrives, will be valid for a fixed period. Was the interest on this loan a fixed rate and calculated in total at the start of the loan period? If so, your settlement figure will be slightly lower than the current balance as they will, if you pay back in full, refund some of the interest they calculated you would pay over the term.

taxi73

It is as EH says ..
The paragraph in bold is only relevant if you are overpaying it in bits and pieces not as a lump sum.So the second paragraph is not relevant to you as you are not making extra payments to your loan.

You just need to phone for the settlement figure..which will usually be valid for a month and should be as EH described.

Seaxwyn

Ohmygosh Karma, big life-changing decisions being made here.

I have read and reread all your figures and my gut instinct is to pay off the loan - one less payment a month to find and a big saving on interest. But I am not someone to follow on financial decisions - I would always trust Taxi more than anyone with this kind of decision.

That house in HH is lovely! It is massive!

taxi73

Thanks Seaxwyn...that's anice thing to say.
Yes karma is ready for an exciting stage in her life(she doesn't know it's exciting yet though but we will convince her).
Everything will be absolutely fine x

Karmacat

I *am* a bit excited now

Thanks for this, all - I think I'll phone then write for confirmation - they're a tricksy lot,after all, and I don't trust them enough to makea decision about thousands of pounds based on one phone call - I can't say, "you said this" if I can't produce a record - the inconsistency of staff is one reason why we do phone mystery shops, after all. I'll push the thing about capital outstanding vs. account balance when I ring - if it isn't the capital outstanding that I repay, or something very close to it, then I'm not interested, as I said earlier I'll let inflation do my work for me.

taxi73

When you phone up for the settlement figure they usually send a letter saying you have to pay XXX by such a date .I'm sure it'll be the capital + either 28 or 56 days interest.That's how most work.

Karmacat

Thanks Taxi, I was wondering about that.

I've been out for the day on that National Trust freebie! It was great - went to Nymans Gardens, where I went with Wol last year then checked out Haywards Heath - how busy the coffee shops were, that sort of thing (busy, is the answer). We tried to check out a show house, it was supposed to be open till 4pm, but it was closed at 3 :mad: v bad.

Lovely afternoon, and it was *so* sunny here. Happy sigh ............