please look at my mortgage situation

pfpf

hello you lovey MSE'rs.

ok. we remortgaged at the end of march to an abbey 2 year at 4.79% APR. we are paying the standard monthly payment with no overpayments, we borrowed £70,000 over 20years. we cannot change from this mortgage until march 08 due to redemption fee's.

i am now feeling a little upset because we were down to 14 years before the remortgage and now having found this site wonder if i could have done things differently?

we are in no position to make a big increase in our payments, if any and dont have any savings as such, money is tight but im happy with my budget, so this is only about the mortgage.

we do pay 50.00 per month into a plan that will mature in oct 2009 and should return about £7000.00.

if if we could start paying £50.00pm over right away, what would that do to reducing the term? is it as simple as telling the abbey to make DD payments for 50.00 more than needed? does the term automatically reduce because of this?

what effect will the 7000.00 we get in 3 years have if we used it to pay off a bulk?

i am sorry if i havnt explained very clearly but i am not really sure of all the mortgage ins and outs.

any help appreciated.

thank you.

md_14uk

The first thing you'll need to do is look at the T&C's of your mortgage to see how much you are allowed to overpay, this is probably 10% of the initial amount so you'd be OK with the £7000. There will be details here of the process for making regular overpayments too!

There's a monthly overpayment calculator here... http://forums.moneysavingexpert.com/showthread.html?t=155707 the extra £50 will cut approx 3 years of your term.

It is hard to say how much the difference the £7000 will make due to the complicated maths involved. You'll be out of the fixed rate tie in period by then and the effect of the £7000 will depend on whether you stick with the SVR or remortgage... It's fair to say paying this off you're mortgage will reduce the term significantly.

Hope this helps!

pfpf

it helps alot thank you, the £50.00 overpayment knocking around 3 years off is a good start. and yes, i will remortgage after the 2 years to a better deal and will look more carefully then.

i will read through my paperwork, but in general for overpayments do i just need to tell my mortgage company to up the DD ?

thanks alot.

David_B_2

pfpf wrote:

i will read through my paperwork, but in general for overpayments do i just need to tell my mortgage company to up the DD ?

thanks alot.

As mentioned above, it depends on what your T&C's say to whether your going to get stung for overpaying and by how much. If the penalty is going to be more than you'll save it may be a idea to stick the £50 into a ISA or simular and then pay the total collected amount off when you remortgage. Personally I would read the T&C's and then contact your bank and make sure you know what you can do and how much it will cost you (if any) before telling them to up your dd as they will gladly do anyway. Don't give your bank anymore money than you have too!:mad:

pfpf

looks like 10% overpayments total per year so i should be ok, and i wont be with them by the time i get the windfall unless they offered me a good deal.

so monthly overpayments from now till mortgage ends with Abbey, then remortgage or stay depending on deals, then about £7k to pay off in 2009..already i can see the term coming down again

oh btw DB ya big !!!!!!, you found me

thanks for the headsup on this site. :T