Our A & L repayment mortgage - your advice please.!

keith.bucknall

Dear All,

Good afternoon, I just wondered what everyone thought of our situation. We came off a fixed 3yr interest only (due to new family and salary cut) a few months ago. A&L put us down to a rate of 1.49% (0.99% above BoE base).

We used the drop to save some money for some refurbishments and now just received a quote to go back onto a repayment. We owe £195k on a £220 - £230k house over 21yrs and 3 months, this works out at £893 so we are going to pay £1k a month leaving £107 over paying.

A&L say this will take the term down to 18yrs 8months - very nice.

Now my thinking is not to move to a fixed rate even if the rates go up to 3% (or more, over the next few years) - what does everyone think or have any recommendations.

thanks all :rotfl:

Keith

opinions4u

I'd stick with the tracker.

I'd also stay on interest only and overpay in to high rate easy access savings accounts and ISAs. Make sure you overpay on two counts ... enough to repay the mortgage within the agreed term and an additional amount to take in to account possible rate rises in future. If you work to a 5% rate you will set your finances up to win!

You should be able to get higher than 1.49% in net savings rate rather than reducing mortgage debt.

If you follow this suggestion:

1) Keep disciplined about it.
2) Keep track of savings rates and mortgage rates.
3) Be prepared to move your savings to a better paying provider.
4) If mortgage rates rise above your net savings rate, withdraw capital and interest from the savings accounts and pay it off the mortgage at that point.