Money on my mind....

Gerrym1984

Bought house for £130,000 in August and 10% deposit so mortgage currently £117,000. Currently in fixed term 5 year with halifax - 5.74% for 1st year and 6.69% for the following 4 years.

Is it likely that when i go to remortgage in 5 years time that i will at least get a better interest rate that what i am currently getting???

I appreciate the market is difficult to predict regarding house prices in 5 years time however if anyone can put my mind at rest i would be most gratful. Despite 5 years being a long time i can't help but worry that if i can't make overpayments galore i will be in trouble come the end of my 5 year term.

Ty in advance

TrickyDicky

Instead of making overpayments, whats wrong with keeping what you would have overpayed in a saving;s account?

Cannon_Fodder

You won't earn in a savings account what that mortgage is charging in interest, especially after tax is taken into account, so little point saving imo (apart from the usual emergency funds, clearing more expensive debts etc).

OP, you presumably budgeted to be able to afford 6.69%?

In which case, pay the difference between that and 5.74% as overpayments, asap. The sooner you put even a little dent into the capital, the sooner the snowball effect of reducing interest and having spare for more overpayments starts to have an effect.

Have you a repayment vehicle in place? If you have, is that flexible and able to be used to reduced the size of mortgage, in 5 years?

If not, switch to repayment. In 5 years, you will make significant inroads to the capital, making the Loan to Value better at next re-mortgage, leading to a better rate.

Berkshiregirl

http://www.whatmortgage.co.uk/calculators/fleximortgage.html

This link might be of interest to you - see the effect that even overpaying by just £20 can have over the years.

Gerrym1984

Thanks for the replies folks, i have budgeted for the increment in the 2nd year and as you say the overpayments i'm making now in the first year are actually what i am scheduled to pay in the second year therefore despite making overpayments 1st year, 2nd year means that paying the same as year 1 is only my regular mortgage payment.

Hope that makes sense somewhat. I am going to try and keep up overpayments in the 2-5th year even if its only £20 or so.

Cannon fodder - very helpful advice. I have opened a Credit Union Acc for borrowing at very low interest to maybe take £250 off the capital at the end of each year.

The info on the making my LTV has given em food for thought