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I hope you folk can throw some light on this as I am very confused.

I have a combined mortgage with 55k interest only and 26k on repayment. One of my endowments matured so I went to pay off 20k from my interest only. If I do this my building Soc says my payment will in fact go up by £105 per month from £253 to £358.

I can't work it out at all,i have 14 year left and pay 1.75%

Am I just being thick :( feel that they are trying to rip me off in some way.

Regards

Rewsal

Comments

  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    edited 9 December 2010 at 10:51PM
    Are they making it all repayment.

    my calcs are as follows

    £26k repayment £175pm
    £55k I/o £80pm

    total £257pm ( close enough )

    £61k repayment £409 perhaps not?

    A few other combinations don't work either

    I can't see why ask for a break down.
  • I spent 40 minutes trying to get this explained. In the end I have said return the 20K I'll pay the £253 while I try and figure this out.

    Just not sure who or where to go to next. should I just ISa as much as possible two of us so £10k could go straight in, cos I can get better than 1.75% interest on the Mortgage.


    I'm just stuned
  • Hi. Only thing I can think of is you haven't factored in the payment to the endowment. How much were you paying a month into that? Is the endowment payment + the repayment mortgage higher than 358? The other 6k has probably been change to repayment as well
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • DVardysShadow
    DVardysShadow Posts: 18,949 Forumite
    Ask for their calculations in writing. You are not being thick, they are. If you pay off £20000 on interest only, at 1.75%, then your annual repayments should drop by £350 - ie £29.16 per month less.

    But if you can get better than 1.75% on an ISA or something, then that is what you should do.
    Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam
  • If you are basic rate tax payer, why repay £20k when your mortgage rate is 1.75%? Stick the £20K in an instant access account at Lloyds and you'll earn 2% (2.5% gross). I know it's only £50 per year but there are better rates available than that offered by Lloyds.

    ISAs may be a good enough option if you don't normally use your allowance. A couple could have the full £20K in cash ISAs within 4 months. Typically paying 2.85% you would profit by £220 per year if your mortgage rate doesn't change.

    GG
    There are 10 types of people in this world. Those who understand binary and those that don't.
  • It sounds like they are changing you to a new mortgage product with a rate of 4.94%.

    Get them to put it in writing and please let us know what happens. It could just be the call centre being a bit thick. Your payments should be £225.65 ish (£51.04 & £174.61 for the Interest only and Repayment mortgages respectively).

    GG
    There are 10 types of people in this world. Those who understand binary and those that don't.
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