AM i allowed to overpay?

[Deleted User]

mrsmasterplan wrote: »

Does this mean though - that if the capital balance gets lower and lower, the interest rate will too as i assume this interest is proportional to the borrowed amount..?!

The interest rate will stay the same but the interest amount charged will be lower because as you say, it is proportional to the borrowed amount.

[Deleted User]

getmore4less wrote: »

This is wrong, the best option, if you can get it, is IO with no overpayment penalties and overpay
It won't save you money over the equivilent repayment(or cost more) but is a lot more flexable.

The question is can you get it?
You highlighted this --> "Firstly, most sensible people get repayment mortgages" as being wrong. I stand by what I said with the emphasis on sensible. You should remember that most people are not into the ins and outs of high finance. They want a mortgage that will pay for their property in a given period of time without having to worry about whether they've paid sufficient capital each month in order to be on track for their redemption date.

mrsmasterplan

CR10 wrote: »

The interest rate will stay the same but the interest amount charged will be lower because as you say, it is proportional to the borrowed amount.

Right thats what i wanted to hear, so even thought itll only drop slightly, it will get lower as the capital amount lowers. Thanks!

Kaz2904

getmore4less wrote: »

Repayment mortgages don't work like this

No, I'm aware of this.... I was trying to illustrate it in an easy way to see it. For example, if you got a fixed for life mortgage, you would know how much you were going to pay each and every month for the whole mortgage. It wouldn't change.
Overpayments would change it though because you would accrue less interest.

getmore4less

CR10 wrote: »

The question is can you get it?
You highlighted this --> "Firstly, most sensible people get repayment mortgages" as being wrong. I stand by what I said with the emphasis on sensible. You should remember that most people are not into the ins and outs of high finance. They want a mortgage that will pay for their property in a given period of time without having to worry about whether they've paid sufficient capital each month in order to be on track for their redemption date.

Agree repayment is the low risk easy solution, with overpayments being the iceing on the mortgage free life.

Setting up a DIY repayment on IO is relativly easy when explained so maby there is a fine line between sensible and simple.

sandrad44

There are so many products out there that is is confusing. We were badly stung ( by a so called financial adviser) a few years back. We are now on an interest only libor rate deal with redstone . Its ok as the payments are so low. I am just not sure what to do. We are allowed to overpay £1000 per year. Should we stick with libor plus 2.5 % and overpay........ ?? Our mortgage is for £122000 house valued at £185000

So scared to remortgaeg because of the last deal......... :eek: Any thoughts would be appreciated

VIGILANT22

Redstone was primarily a sub prime lender..Is yr credit file affected....What happened you felt you had been "stung".

sandrad44

Hi

Its a long story but I will try to explain....... We went to a broker who told us we had been accepted with a high street lender as our credit file wasn't too bad. After 5 months of excuses we were told that deal had gone through . It was just coming up to us making our normal monthly mortgage payment. hence cancelled direct debit to building society :eek:
now realise this shouldn't have been cancelled. Broker then came back saying because it was classed as a missed mortgage payment the only deal available was ow ith redstone @ libor plus 2.5% at one point we were over £1000 per month.......... now we are only £350 Problem is trying to pay £1000 was hard , but got there in the end. One default due to come off credit file july. 2 SMALL ccj' ( under £200 ) satisfied. On
Debt arrangement scheme for rest ( bank charges ) included !

Now just need to do the right thing mortgage wise as we have lost a good few years interest only. Can now afford to pay more than the thousand per year to reduce balance. As long as the interest rate doesn't shoot up.

Hope this all makes sense.....