overpaying on a fixed rate mortgage

plzhelpmesave!

Hi

I have just recently got a part time job, so will be earning around £500 a month - wahey! would love to start saving this or overpaying towards the mortgage - whcih we fixed last february for 10 years @ 5.39!!!:eek: Was told it was a brilliant rate at the time and we should grab it with both hands, as we wanted the security of a fixed.

Cant seem to get a straight answer out of west bromwich as to what would happen to any overpayments? hubby was told overpayments would sit in their account until the end of the 10 years and then be put towards our mortgage, and I was told that we could overpay but they didn't quite know how and no-one ever called me back.

Anyone out thre any idea how overpayments would work with such a fixed rate, with the west bromwich? Can we just ask to increase our standard payment, by £100 a month inititally as we also need to get some savings together so want to put the other £400 a month into an ISA. Currently payng £705 a month and would like to up this to £800 if I knew all the money was going towards the mortgage interest and not just sitting somewhere for another 8 years!!

thanks for any replies

Busy_bee_3

I have never heard of the lender sitting on the money until the fixed rate comes to an end. I thought the overpayment would come straight off the amount you owed (but i'm no expert). Do you have any paperwork/terms and conditions relating to the mortgage you took out? There should be a section relating to over payments. I've just recently taken out a mortgage and the offer document gives details of what % we can overpay. Give the lender a ring, they should be able to tell you all this over the phone.

plzhelpmesave!

thanks BB - paperwork says up to 10% a year, but when we called to see how to set up paymets that's what we were told! they said it was best save the money as it would only sit there till the fixed period ended and then be allocated to our account... doesn't sound right does it???

dimbo61

Get back on the phone to the mortgage centre and not your local branch.
Read through your paperwork carefully and consider saving at least 3/6 months of income ( not just mortgage payments ) in ISA,s and then overpay the mortgage as saving rates will not ( at the moment ! ) match your mortgage rate.
Ask the Mortgage centre to confirm in writing what would happen to any overpayment .
A 10 year fix at 5.39% is not a bad rate and you have long term security!
Good Luck

ailuro2

You're normally limited to 10% of what the outstanding balance was at the beginning of your mortgage year when on a fixed rate deal.

5.39% is a good deal for 10 years. Ask around 5 years from now and you'll probably not feel so bitter. The long term security of it is great - I've paid a variable rate mortgage at 14% and it was awful - that was back in the days before we all had PCs and access to Martin Lewis.:money::D

Keep a little of your wages back to use directly, otherwise you'll never see the fruits of your labour. A little treat once a month to acknowledge Mum's hard work will not go amiss. Even a trip to the cheap seats cinema on a Saturday morning is not giong to blow the bank.

Congrats on the new job, btw:T

black_taxi_2

if you look at history of interest rates 5.39 is quite good over the longterm

ave been about 7/8%---been up to 15% :eek:

plzhelpmesave!

thanks guys - feel so much better about our rate now! we wanted the security at the time when we took it out and were really happy with the deal when we got it, so over the term, you guys are right, i'm sure we'll do ok.

Will get on the phone to them now and see what they say.

Just want to be able to start saving more, spending a lot less and put something regularly towards the mortgage.

oh and Ailuro, will remember what you said about treats - especially for mum!!

thanks all

UPDATE - just spoke to someone in the mortgage centre and was told we could pay up to 10% a year which would definately go towards the capital....wahey! better really get down to saving then!

financialbliss

black_taxi wrote: »

if you look at history of interest rates 5.39 is quite good over the longterm

ave been about 7/8%---been up to 15% :eek:

Yes, I'd agree - a very good long term rate. Anyone for a graph?:
http://forums.moneysavingexpert.com/showpost.html?p=18699353&postcount=896

FB.

black_taxi_2

west bromich have withdrawn 10 year---now only 2/5 year @ around 5%ish

remember 10% o/p is on full capital not monthly premiums

phone them up --ask this question directly---whats the most i can o/p without incuring charges?

then use this calculator to find how much shorter your mortgage will be?

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

black_taxi_2

whats the most i can o/p a year without incuring charges?

TighterThanTwoCoatsOfPain

you'll be better off asking the Building Society to calculate incase you fall foul of any charges..

Just another congrats on getting that rate... i can assure you there are lots of people looking for mortgages now who would kill for that rate even today.

Dont worry about the head line figures of trackers at 3.5%.. those people will be squeeling to come off such a high margin tracker when (if?) base rates head north... you would then be at the mercy of prevailing rates at the time, dont kid yourself that you could get ahead of the market either..

Whilst the above is very much my honest opinion, it could be clouded by the fact that I am currently fixed for 10 years at 5.1% myself :money: