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reduce term or overpay?

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My 2 year fixed deal with the woolwick is due to come to an end this month. I currently owe £49,500 over 21 years - paying £308 per month.

I am thinking of reducing the term to 19 years which would put the monthy payment up to £347.00.

I am thinking of a fixed deal again - don't want to pay any fees etc so am looking at staying with the woolwich at 5.29 fixed for 2 years.

Would people reduce the term or put the extra money into a separate savings account to overpay in one lump sum.
Nice Shoes & Expensive Designer Handbags, are my downfall!
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Comments

  • payless
    payless Posts: 6,957 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    You may be able to overpay directly into mortgage ( please check!) which would likely be more cost effective ( unless after any tax you earn interest above the mortgage rate)

    Shortening term is a more structured method, but if funds become tight its not as easy to change back, as it is to stop overpayments

    If mortgage is on daily interest calculation then overpay off mtg should be same ( cash wise) as shortening term
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • payless
    payless Posts: 6,957 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    niceshoes wrote:

    I am thinking of a fixed deal again - don't want to pay any fees etc so am looking at staying with the woolwich at 5.29 fixed for 2 years.
    .

    ARe they waiving the arr/ swap fees?
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • There are no fees for me to go on the 5.29% fixed deal, they notified me on this offer in a letter 3 weeks ago, phoned to take up the offer then they wanted £595 arrangement fee - have complained and they are going to honour the original offer - or so the guy said who I rang today!

    To be honest, I think the 5.29% is high, but I am basing this on the original interest rate that I had of 3.83% for the 1st two years of this mortgage!
    Nice Shoes & Expensive Designer Handbags, are my downfall!
  • payless
    payless Posts: 6,957 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    with the fee its would be out of line..but without the fee ( and lack of exit fee / hassle) its likely to be similiar ( overall) to other 2 yr fixed deals- ( based on your declared loan size- for others reading , the maths may be different)

    Yes rates were muich lower 2/3 yrs ago ( wish you had taken a longer deal then ?) Woolwich do have other rates that are lower - but variable.
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • I like the idea of certainty - knowing what my monthly payment is and knowing that it won't change, so I think that fixed is the preferred way for me.

    They do have a 10 year deal at 4.98% which would make my monthly payments £338 per month over 19 years - but there is an arrangement fee of £595 I believe.
    Nice Shoes & Expensive Designer Handbags, are my downfall!
  • payless
    payless Posts: 6,957 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Yeah again £595 ( think they try and stiff you with another £100 ontop as well), although if they waived one......

    BUT 10 yrs (tie) is a long time , but that said 2 yrs does not give that much security and risk of being hit with fees when doing it again in 2 yrs ...
    there's other products ( min £50K) but variable

    http://www.personal.barclays.co.uk/PFS/A/Content/Files/178_CRS_23.08.06.pdf
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • Lifetime tracker of 4.94% looks like the lowest there with no fees.

    I assume that that rate tracks at 0.19% above the base rate for the term of the mortgage, so if the base rate goes up, the tracker rate goes up - have I got that right?
    Nice Shoes & Expensive Designer Handbags, are my downfall!
  • payless
    payless Posts: 6,957 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    thats the one .. not saying its best suited though , as you say security is important , although the lack of re-doing every few years is interesting
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
  • Yes, I must admit - I took the mortgage out 4 years ago, both on 2year fixed deals and I must admit time flies - It sure doesn't feel like 2 years ago I remortgaged! It also seems harder this time around, but I think I am showing a bit of resistance to the increase in interest rates!

    Think I will go with the fixed 5.29% for 2 years (don't know what will happen in 2 years, might want to move house and buy somewhere with the OH) and I think that I will reduce the term, for the sake of the extra £20 or so, that it will cost per month. I can always find £20 somewhere!

    Thanks for your help payless
    Nice Shoes & Expensive Designer Handbags, are my downfall!
  • payless
    payless Posts: 6,957 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Its a pleasure ... see you knew what you wanted really
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
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