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variable rate and being able to overpay or fixed rate and pay off less
menollyke
Posts: 81 Forumite
I just want to get some advise on what you think is the best way to go forward.
We took out a mortgage in june 2008. The house was valued at 125000 and the mortgage we had in place was for 80500. The interest rate was 6.1% secured for 2 years and since august the rate is now 2.5%. We do now pay the same as we did in the first few years and use the difference as overpayment on our mortgage. Outstanding at the moment is 78200, but this months payment has not been made yet.
However we are stuck with our lender cause our circumstances changed quite a bit. I have been made redundant and my partner is earning about 16k from next month. (he is due to get promotion) We are still able to go onto a new fixed rate, but seeing that the best fixed rate we can get is 3.98% for 2 years and over 4.59% for 4 years I am tempted to just keep the payments as they are and leave it to a mortgage who can not be more than 2% over the base rate of england.
If we switch to another fix rate when we come off it we have to pay their standard variable rate which is at the moment on 4.99%. My thoughts are that we can afford to pay 6.1% and even if the interest does go up it will take a while before it gets to that and in the meantime we can easily pay off more. Is this a sensible idea?
I know it is personal for everyone, but would like to know what you would do in our situation.
At the moment with our income and tax credits we are able to keep the payments as they are, even safe up more money. We also have about 8k in savings and 6k in shares we can cash in if we need the money to put into our mortgage.
We took out a mortgage in june 2008. The house was valued at 125000 and the mortgage we had in place was for 80500. The interest rate was 6.1% secured for 2 years and since august the rate is now 2.5%. We do now pay the same as we did in the first few years and use the difference as overpayment on our mortgage. Outstanding at the moment is 78200, but this months payment has not been made yet.
However we are stuck with our lender cause our circumstances changed quite a bit. I have been made redundant and my partner is earning about 16k from next month. (he is due to get promotion) We are still able to go onto a new fixed rate, but seeing that the best fixed rate we can get is 3.98% for 2 years and over 4.59% for 4 years I am tempted to just keep the payments as they are and leave it to a mortgage who can not be more than 2% over the base rate of england.
If we switch to another fix rate when we come off it we have to pay their standard variable rate which is at the moment on 4.99%. My thoughts are that we can afford to pay 6.1% and even if the interest does go up it will take a while before it gets to that and in the meantime we can easily pay off more. Is this a sensible idea?
I know it is personal for everyone, but would like to know what you would do in our situation.
At the moment with our income and tax credits we are able to keep the payments as they are, even safe up more money. We also have about 8k in savings and 6k in shares we can cash in if we need the money to put into our mortgage. 0
Comments
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Just to add we both have a credit card but both are used and paid off each month completely. No other outstanding loans or debts except a studentloan which will come off salary before we will be getting it.0
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Your current plan sounds a good one to me. I too would stay on the variable for now and overpay.0
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Interest rates would have to climb above 4% before you need to pay more so stay on the current deal and overpay every month0
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