Stick or Twist? Young couple need advice, pls help :)

Thrugelmir

Thrifty360 wrote: »

Hi Thrugelmir, thanks for your suggestions.

The upside will be we'll be £22k better off in equity than if we stay on our current deal.

I appreciate that any rise in BoE base rate will affect our payments, indeed I expect the base rate to rise, but not to the extent where it would offset the £22k gain in equity this would give us. Provided we can accomodate any potential increase on the £135k mortgage payments on a month-to-month basis we should be ok.

I don't quite understand the latter part of your post I'm afraid. How would money saving tips help with this decision? Do you mean they would help because they would allow us to save money with which to then make overpayments?

You still have the £22k debt whatever form its in.

To obtain the best loan rate it may well be secured against the property. So makes no difference in the equity in the property.

If your financial circumstances change the loan is fixed. Early repayment will incur settlement fees worse than a typical mortgage ERC. Something worth considering.

In answer to your last question. Yes. If only for a period of 6 months to a year. Knocking a hole in your mortgage debt will make a huge difference in the years to come.

Thrifty360

Thanks for your advice and words of caution Guys. I think we're going to go ahead with this. (Provided we can get the loan of course...)