£10k possible to pay against mortgage

mariejader

I wonder if you could help me please.

Hopefully at the end of the month I should have £10k which I wish to put against my mortgage but I don't know if I can or which would be the best account to pay it against

I have 4 accounts:-

1) £51,003.02 o/s 5.59% fixed rate (ends April 2007) 15yrs 7 months left

2) £5,376.25 o/s 5.59% fixed rate (ends April 2007) 15yrs 7 month left

3) £2,220.58 o/s 5.59% fixed rate (ends April 2007) 15yrs 8 months left

4) £16,350.98 o/s 6.59% 7 yrs 5 months (no tie in)

I am not sure if I can make a overpayment of £10k which would be a one off, I would rather not pay the number 2 and number 3 accounts off as these payments are low and to be honest we struggle to make the repayments against the number 1 and 4 accounts.


My feeling is if I can pay £10k should I put it against the number 4 account because it has the highes interest rate but then the number one account has more outstanding and longer to run.

Also the figures that I have been quoted were given by B/S would these be settlement figures? or would they be reduced again for an early settlement? I know £10k is not going to cover it but if the figures on the number 4 account is reduced for settlement I may be able to pay more in.


Thanks in advance

dang

"4) £16,350.98 o/s 6.59% 7 yrs 5 months (no tie in)"

I would pay this one down first - without a doubt.

"Also the figures that I have been quoted were given by B/S would these be settlement figures? "

You would have to get the bs to confirm this.

comping_cat

If you paid off 2 and 3, you would have the extra to start overpaying the remaining 2, also, is there a reason you cant re negotiate 4 to a lower interest rate?

dang

"If you paid off 2 and 3, you would have the extra to start overpaying the remaining 2"

You should think twice before doing that - you should ALWAYS pay off the highest rate first.

"is there a reason you cant re negotiate 4 to a lower interest rate?"

Good call on that catowen.

If you can renegotiate that to lower than 5.59%,it would put you in a good position to throw the 10k at either option 1,2 or 3 - it really wouldnt make a difference which,as they are all at the same rate.

bunking_off

If you can't get the rate on (4) down, then use your £10k to reduce that one, make sure that you get them to reduce the term rather than the monthly payment (should get it down to approx 20 month term?).

Once that's cleared, use the payment you'd been making to that (£350-360?) to regularly overpay (1)-(3).

mariejader

Thanks for the reply's I thought the best option was number 4, but was not sure if in the long run it would have been better to throw it at the number 1 account.

Once I have the money I will ask them about reducing the interest against the number 4 had not thought of that but I think it's a set rate as it was for improvements or something along those lines.

mariejader

update, I am going to have £20k so am going to pay the number 4 off in full, which leaves me with approx £4k should I pay number 3 off and do a part payment against number 1 or number 2 or would I be best putting the left over money from number 4 straight into number 1.

The payments on the number 2-3 account are only added together just over £60 a month so I am wondering if I would gain more by paying what's left into the number 1 account.


I know the interest rates are all the same but I am thinking of the long term saving rather than short term.

Hope that makes sence to someone I am so confused with it

Thanks in advance

bunking_off

Given the rates on 1..3 are the same, I don't think it really makes any difference. Question of whether you want the convenience of having less outstanding accounts (use what's left after paying off 4 to pay off 3 then the remainder into 2), or convenience of splitting your windfall across fewer outstanding mortgages (use what's left after paying off 4 to pay off 1).


...all assumes there's no penalty charges for overpayment.

I guess that come next April, when you search for a new deal to follow-up your 5.59% you'll consolidate 1..3 into a single loan in any case.

Wish I had the problem of what to do with a spare £20k...

comping_cat

I would pay 3 and 4 off, and then pay the rest into 2, that way you only have 2 mortgages left, and maybe could concentrate on paying off 2 so you only had the one!!!

Waldir

Hi mariejader

What will happen in April 2007 to accounts 1, 2 and 3? Are they going to switch to the Standard Variable Rate (at ~6.75%)?
Are you going to pay new arrangement fees to keep them at a low rate?
If that's the case, it might be better to pay off 2 and 3 and use the rest of the money (£12.5k) to pay as much as possible of 4.

Before paying off any loan, you definitely need to check that your lender doesn't charge you any redemption fee. In case he does, it might be cheaper to keep exactly the right amount of money to finish paying accounts 2 and 3 in April 2007.

Waldir

mariejader

Wish I had the problem of what to do with a spare £20k...

I would prefer to have my father still alive that the £20k but I guess that's life

Thanks for all the reply's