how much will I save by overpaying ??

sandrad44

Hi Everyone.

We have been waiting for a mortgage offer from ' Beacon ' since June !!
We are currently Libor rate + 2.5% ( interest only ) so our mortgage payments are really low. Our outstanding mortgage is approx 121,500 and the house valuation 180,000

I have decided not to go with beacon and instead pay extra to the mortgage........... This will also allow us to hold off till next year to show clear credit file , and give us higher LTV I was planning on paying an extra300 a month to the mortgage but just not sure how much this would save ......

dexter_fan

If you go to the Mortgage free wannabe thread, there are several 'stickees' at the top to link to various calculators. Alternatively (before I found this site) I would Google 'mortgage overpayment calculator'. You will be amazed at how much difference even the smallest overpayment can make
Good Luck

hollydays

If you are talking about mortgages like The One Account-be afraid,be very afraid..

Joe_Bloggs

@Sandrad44
What is the present value of the libor rate that you are on. I know lenders tend to pick a specific libor rate that suits them. You may see various libor rates in the financial media but are you actually on that rate ?

Make sure you have no other debts at a higher interest rate than your mortgage interest rate before considering the overpayment route. Also make sure that you have built up or will build up a reserve of savings. These savings will enable you to service your debt repayments in the event of a change of circumstances.

Check with your lender /review your terms and conditions on the specific treatment of your overpayments. You may have to notify your lender that this money is meant to repay capital and it is not an early regular monthly payment of interest.

J_B.

sandrad44

We are currently with Redstone who are just an admin collector for the mortgage , It will be a few months till defaults fall off credit file and then we will hopefully be able to go to a main street lender so I thought the extra cash could go to the mortgage.

We do not have any other debts that need to be cleared off but don't want to fritter the money away.........

Joe_Bloggs

It might be worth saving the money rather than bothering Redstone with an overpayment if it is just for a few months.
You can use the money to save up for mortgage fees/ survey/solicitors fees if required by your future lender. Consider asking Redstone for a redemption quote to see how much it will cost to leave them.
J_B.

sandrad44

Hi Joe Bloggs

We did this in June when our broker went through Beacon. We have no penalties as our deal expired more than six months ago. Our problem at the moment is that credit file is still showing defaults ( will drop off June next year ) they relate to bank charges !! Therfor we would find it hard to get a high street lender at present. The mortgage is under the 400.00 pound a month so I feel that I would be better saving the extra till we can eventually get a better deal. The mortgage market HAS to change soon as there are so many people in the same boat ie , that their credit file is not squeeky clean , but credit filel has vastly improved over the last few years :j

Joe_Bloggs

@Sandrad44
I am due for a re-mortgage next May/June. With this in mind I will not take out any credit cards or loans. I also will not get caught out by bank charges as I have unused overdraft facilities to meet unexpected bills and instantly accessible savings to restore a credit balance.

With a good credit record 'Loan to Value' is the key to getting a good interest rate. That is the ratio of the property loan to the property value. You can find out what similar properties are going for via Zoopla. You will have to prepare for a property survey by an independent surveyor. So you have to do what you can to make the property an attractive asset to a future lender. My parents are trying to is to sell so my dad trims the neighbours hedge etc etc.


You did not get back with the exact libor rate that your mortgage was based upon. If you are paying £400 interest per month then you are paying interest at just under 4% per annum. This is a fair rate given the poor rates you can get for remortgaging these days. This rate also goes toward answering how much you could save by overpaying.

My views are my own and I am not a mortgage adviser.

J_B.

sandrad44

Hi Joe Bloggs

I think the rate we are on at present is approx 3.79% ( libor + 2.5% )
This is due to be reviewed again in December where it will reduce again. We are on 3 month libor rate , so the rate has reduced even further since last change in september. It would be ludicrous for us to sign up for beacons deal 6.45 with a 2700.00 fee !!! We just save hard over the next few months and get the LTV down a bit more.........