What to do at renewal? Drop years or overpay

simmo36

Hi im new to this forum and would like some advice.
My mortgage with c&g is changing to their standard variable ( 2.5% ) in April we are currently on a tracker which is a really good one and i know im going to pay a little bit more now, which i expected. The thing is we are currently paying £ 150 extra each month off the mortgage to bring it down a bit, we have 16 years left and would like to take it down to 10 years. Would it be better to reduce the years ( when its due in April ) or just carry on paying even more off each month.
Mortgage £ 80,000 16 years left:eek:

jaywhoopee

A lot will depend on your job security, the terms of the SVR and the terms of whatever alternative you're considering.

If you're not entirely certain of your security then perhaps leaving the term the same and overpaying is best. This would mean that if you ever lost your job you could stop overpaying and (hopefully) the monthly payment would be less hard to manage.

Obviously if you're likely to be able to overpay by more than the terms of the mortgage allow, reducing the term may be the only option unless you can find a savings rate to beat the mortgage rate.

I have about £184k and 20 years to go, so I'm envious of your 80k

Good luck

littlemrtinkle

Go for the maximum mortgage possible and then reduce your term. That way if you ever lose your job or your cicumstances chance you can always raise the term to give you some breathing space.

getmore4less

leave the term and overpay at least that way you can reduce your payments is you want.

reduce the term and you are commited to the new higher payement.

Do you have an emergency fund?

getmore4less

littlemrtinkle wrote: »

Go for the maximum mortgage possible and then reduce your term. That way if you ever lose your job or your cicumstances chance you can always raise the term to give you some breathing space.

would need permision of the lender, why take a chance when you don't have to?

Overpay is allways the besy option when there are no penalties.

dimbo61

Even though your mortgage rate is going up to the SVR at 2.5% you can still get better than that from cash ISA,s and you are allowed to put in £5100 after april 5th.

simmo36

dimbo61 wrote: »

Even though your mortgage rate is going up to the SVR at 2.5% you can still get better than that from cash ISA,s and you are allowed to put in £5100 after april 5th.

Thats a good idea !!! Stay at 16 years but instead of paying £350 extra on mortgage @2.5% pay it into and ISA paying 4% and pay off at end of year. And whatever money i have in savings can also be paid off.

I did some calculations on this and it will save me £ 150 over the year ( Better than nothing )

Current situation--- Mortgage April 2010 £80,000 16 years left end date 2026
Aim-- pay £350 p/month extra Mortgage end date Jan 2019 :j saving 87months !!!! mortgage free at 43 sounds good to me.

Love this site lots of good ideas Cheers people :beer:
Gotta look at more ways now in saving money,

Jonbvn

littlemrtinkle wrote: »

Go for the maximum mortgage possible and then reduce your term. That way if you ever lose your job or your cicumstances chance you can always raise the term to give you some breathing space.

Sorry but this is incorrect. What happens if the lender refuses to extend the term? Therefore for safety, you should always go for a longer term then overpay.

dimbo61

Why not do a bit of both and overpay and save into ISA,s
Once you have over £16K( think benefits!) in savings overpay as much as you can afford.