Mortgage advice please - I'm confused

greenpixey

I got my annual mortgage statement today and for the first time ever had a look at it. I have to admit I never really taken an interest...just paid the monthly payment and that's it.
I've had this mortgage for 7yrs and taken out two small loans/remortgages on it
my balance last Oct was 77,654.99,
I've paid off £6278,60 this year
the balance is now 75,402.10.
Basically £4,026.01 was :eek:Interest

Can I do something about it? 4,000 in interest seem like an huge waste
If I change my mortgage over to someone else will I be better of...and if so how do I choose a different lender?

My main mortgage account is a Std Var rate 4.00%p.a capital and interest
Second loan is the same.... Std Var Rate 4.00%p.a capital and interest
3rd loan is 6.59%p.a capital and interest (cca regulated)

ginvzt

You would still have to pay interest on it! and 4% doesn't sound bad. (Well, we don't know how much you have on 6.59%)

getmore4less

How big is each bit?

Any penalties for changing?

What is the value of the property?

What is your income?


£4k on £77k is about 5.2% it is the 3rd loan that is bringing this up from 4% which is not too bad.

You would need to find a lender that would give you better rate forthe complete debt.

The big problem is you seem to keep borrowing more money.

What have these borrowing been for?

not_tonight_josephine_2

sorry to sound harsh, but the only real way to do anything about it is to start paying off the loan instead of keep extending it!

ginvzt

Also, were you on 4% all year or has it changed over the year (very likely if your fixed rate ended or similar)?

greenpixey

ginvzt wrote: »

You would still have to pay interest on it! and 4% doesn't sound bad. (Well, we don't know how much you have on 6.59%)

The Mortgage is 48807.54
second loan is 7,619
and the 3rd is 18,975 (6.59%)

getmore4less wrote: »

How big is each bit?

Any penalties for changing? Dont know yet

What is the value of the property? Around 85,000

What is your income? 1,300 after tax (+ 500 ish in child benefit and child credit)


£4k on £77k is about 5.2% it is the 3rd loan that is bringing this up from 4% which is not too bad.

You would need to find a lender that would give you better rate forthe complete debt.

The big problem is you seem to keep borrowing more money.

What have these borrowing been for? Hubby's idea on how to pay off credit card's overdraft and un secure debts he had (bad I know). He has promised not to take out any more loans/cards and he has kept his promise for the last 3yrs [/QUOTE]

GSXRCarlos

i'm slightly worried that you've never looked at your mortgage statement over the past year?

i have an excel sheet (from one of the other members on here) that i use to work out my interest etc.

As with any credit, if you only pay off the minimum payment it'll takes ages to clear - every time you make an overpayment, you're reducing the capital you owe.

In the long run, overpayments will save you having to pay out so much in interest

I'm currently paying out over £11 per day in interest alone on my mortgage!!!

greenpixey

not_tonight_josephine wrote: »

sorry to sound harsh, but the only real way to do anything about it is to start paying off the loan instead of keep extending it!

Totally agree.
My husband used to work as an contracted aircraft engineer and earned good money...he also spent them like no tomorrow. When our first child arrived the work he used to do started to dry up... when our 2nd child came he was more or less unemployed and started using credit cards and loans to fund our living. Then I got laid off (I worked for Norwich union until they moved their business to Scotland so everyone had to go)
He now got a fairly well paid job working in an office whilst I'm home with our youngest (3rd child).
We are managing fine financially but I'd like to make improvements if possible. So I'd like to see if I could do some changes to the mortgage

getmore4less

£75k on £85k house with an income equivilent of around £28.5k(£1800pm)

So LTV is 88% income multiple 2.6.

I think you will struggle to find a better deal it would need a 90%LTV deal and there would be fees.

Forgot to ask what are the terms of each bit.

You could ask your lender to make the main loan Interest only and divert the payment to the higher rate loan if no penalties this will reduce the debt quicker.

Also any overpayments should go to the highest rate loan.

Gorgeous_George

Each time you make a payment...
1. the interest cost reduces and
2. the amount of capital repaid increases

The repayment stays the same each month as one balances the other. This is what loans do - not just mortgages. Don't worry about it, it is normal. If I had saved £77K with your lender I'd want interest and you'd be the one to pay it.

If you want to reduce the amount of interest paid you could...
a. pay more off (as a lump sum of each month)
b. negotiate or find a cheaper mortgage

IMHO, interest rates will not fall any further - this is as cheap as it gets. If you can afford to pay a bit more, do so. If you cannot afford to pay a bit more, fix your mortgage rate. Alternatively, when rates inevitably rise, you could increase the term but, of course, this will cost you more.

Well done for reading the statement. You will probably never receive a more important document through the post.

Why not agree, as a family, how much you want to owe by next November (being realistic) and work at achieving this. If you don't meet your target, cancel Christmas 2010 as a punishment. If you exceed your target, treat yourselves accordingly.

GG

greenpixey

Thank you all for your replies. It was interesting and I certainly learned a thing or two.Will sit down with hubby tonight and see what can be done