Advice pls - changing 30 yr term mortgage?

the_other_mce

Can anyone help. We have a mortgage on a council right to buy property on a thirty year term. Rate seems ok - 5% and we are paying 560 ish a month. Tied in for three years unless we pay 6%. Is it worth looking to change? We would like to make overpayments but don't think the lender would let us. Mortgage is 90 ish and house is worth 145k. We jumped in with both feet and took the first mortgage offered as have a 2k CCj so didn't think mainstream lenders would consider us. Joint income of #28k (1 full time work /1 part time 2 kids.....) Grateful for any advice. :think:

Joe_Bloggs

Find out for sure if they will allow overpayments. Perhaps they allow them once per year or something. If they wont let you over pay then consider regular savings accounts and mini-cash isas. Make sure the saving rates you get are as a good as they can be.
J_B.

miaxmia

the_other_mce wrote:

Can anyone help. We have a mortgage on a council right to buy property on a thirty year term. Rate seems ok - 5% and we are paying 560 ish a month. Tied in for three years unless we pay 6%. Is it worth looking to change? We would like to make overpayments but don't think the lender would let us. Mortgage is 90 ish and house is worth 145k. We jumped in with both feet and took the first mortgage offered as have a 2k CCj so didn't think mainstream lenders would consider us. Joint income of #28k (1 full time work /1 part time 2 kids.....) Grateful for any advice. :think:

I am a little confused - you say you are tied in for 3 years, so how can you look to change? When is the 3 years up? I know you can sometimes change even with a tie in, but there is usually a penalty to pay for swapping companies.

Ian_W

A penalty of 6% on circa £90K = £5600. Thats a lot to make up in the remaining 3yrs you're tied for and I'm fairly sure you wouldn't save any money by switching now. The VERY best rates ATM are around 4.5% which would only amount to about £1350 savings on your repayments, with the penalty and fees to pay on a remortgage - you'd be well out of pocket IMO.
As Joe says check with your lender about overpayments and if not use your cash ISA allowances [£3000 each per annum] to save the money tax free. You can then pay this off the mortgage in 3yrs time when you're able to switch lender penalty free.
Between now and then you should also do as much as you can to repair your credit history - if you haven't paid off the CCJ that should be a priority - so you have access to the best rates available.

AndrewSmith

The other thing to watch is to make sure that you are outside of your pre-emption period with the local authority from whom you originally purchased the property.

If not you may not be able to switch lenders anyway.

Which lender is it that you are with? May be able to check out theior T&C's for you to see if they allow overpayments.

Cheers

Andy

MortgageMamma

Next time you look for a mrotgage, make sure you use a whole of market mortgage broker, that way you can be sure you are getting the best deal.