Mortgage Ignoramus

TC1

I am not ashamed to admit I am quite (very) ignorant when it comes to choosing a mortgage. I never really seemed to have benefited from good rates like others I speak to.

Currently I have a 5.59% 3 yr fixed repayment mortgage with the Woolwich which expires in April 2011. With a mortgage reserve.

I've decided after many years of ignorance to start asking questions and researching to make an informed decision before April 2011.

Outstanding mortgage is approx £105000
Mortgage Reserve £18500

I have a family so need some stability but would really like to start thinking about reducing my monthly mortgage payments ( for a few months anyway ). So I can start paying off some credit card debt.

I have read in some forums that it is sometimes worth staying on the SVR and waiting to see what happens. My current mortgage agreement says that at the end of the fixed term I would pay .95% above the Barclays Bank Base Rate which i think is at .5%. This would save me about £200 per month.


Any advice gratefully received from you Moneysavingexpert guru's.

TC1

BoGoF

First question, what is the current (realistic) value of your property

TC1

Realistically I think about £320000

getmore4less

OK heres the deal with the Barclays mortgage.

If you don't have offset then the reserve should be at the standard rate currently 4.99%.

With the current loan going down to base+0.95% you won't get a better variable deal than this anywhere else.

Whats the CC debt and what rates are they on?

Also look at snowballing debt here is a calculator.
http://www.makesenseofcards.co.uk/snowcalc.html

If you have fixed the overspending issues then you could consider using some of the reserve to pay off the CC and then paying that back quickly if the rates are higher than the mortgage rate.


Have you done SOA?
http://www.makesenseofcards.co.uk/soacalc.html

this will give you a good picture of where you are and can start to have a plan tobecome debt free (set a target date).

For more help and encouragement on the debts the debtfreewanabe board is the place to be.

blueberrypie

TC1 wrote: »

I have a family so need some stability but would really like to start thinking about reducing my monthly mortgage payments ( for a few months anyway ). So I can start paying off some credit card debt.

I have read in some forums that it is sometimes worth staying on the SVR and waiting to see what happens. My current mortgage agreement says that at the end of the fixed term I would pay .95% above the Barclays Bank Base Rate which i think is at .5%. This would save me about £200 per month.

The rate you're about to go onto is probably the best rate for debt that you'll ever get in your life. You'll be paying 1.45%, and that is an astonishingly low interest rate. (I'm on a similar tracker, not quite as good as yours, but still a very good rate.)

So as long as the base rate stays low, you would be mad to consider remortgaging, either with Woolwich or anyone else.

Now is the time to tackle the other debt and get it sorted out. As getmore4less says, the Debt-Free Wannabe board is a terrific place to get information and support in doing this. Make a list of all your debts, including what interest rate they're at. You will want to ensure you make the minimum payment on each every month, except for the one at the highest interest rate - that one, you'll pay off as much as you can possibly afford. Meanwhile you'll also be looking at ways to move the debts to lower interest rates. The Mortgage Reserve is one possible way of doing this, as are interest-free deals on credit-cards. But the essential thing is that you start to tackle the debt, not just shift it somewhere else.

TC1 wrote: »

I am not ashamed to admit I am quite (very) ignorant when it comes to choosing a mortgage. I never really seemed to have benefited from good rates like others I speak to.

Well you're about to! So use this opportunity wisely :-)

TC1

getmore4less wrote: »

OK heres the deal with the Barclays mortgage.

If you don't have offset then the reserve should be at the standard rate currently 4.99%.

With the current loan going down to base+0.95% you won't get a better variable deal than this anywhere else.

Whats the CC debt and what rates are they on?

Approx £ 12000 :sad spread over 4 cards with 0% rate at the moment on all.

Also look at snowballing debt here is a calculator.

Will have a look at this

If you have fixed the overspending issues then you could consider using some of the reserve to pay off the CC and then paying that back quickly if the rates are higher than the mortgage rate.


Have you done SOA?


No but I'm now going to now

this will give you a good picture of where you are and can start to have a plan tobecome debt free (set a target date).

For more help and encouragement on the debts the debtfreewanabe board is the place to be.

Thanks for the advice.

TC1

blueberrypie wrote: »

The rate you're about to go onto is probably the best rate for debt that you'll ever get in your life. You'll be paying 1.45%, and that is an astonishingly low interest rate. (I'm on a similar tracker, not quite as good as yours, but still a very good rate.)

So as long as the base rate stays low, you would be mad to consider remortgaging, either with Woolwich or anyone else.

I think I know the answer but I'm crossing my fingers that it won't rise too much so I can start reaping those benefits I always seem to have missed.

Now is the time to tackle the other debt and get it sorted out. As getmore4less says, the Debt-Free Wannabe board is a terrific place to get information and support in doing this. Make a list of all your debts, including what interest rate they're at. You will want to ensure you make the minimum payment on each every month, except for the one at the highest interest rate - that one, you'll pay off as much as you can possibly afford. Meanwhile you'll also be looking at ways to move the debts to lower interest rates. The Mortgage Reserve is one possible way of doing this, as are interest-free deals on credit-cards. But the essential thing is that you start to tackle the debt, not just shift it somewhere else.

Mortgage Reserve is all used . I'm hoping some good fortune with a low SVR for a while will help me on the road to recovery.




Well you're about to! So use this opportunity wisely :-)

I hope so and I definately will.

Thanks for the advice and support.

getmore4less

You need a serious look at your budget if you have CC debt AND used up the reserve.

TC1

Yep I know. Reality has finally bitten. Time to sort things out.

TC1

Beginning to see a drip drip of information relating to the potential for interest rate rises in the Spring 2011 :eek:. What do those in the know think ??
And does this alter what you think I should be doing when my fixed rate expires in April.

Tabatha_Kitten

April is Spring
Either way, you cant actually do anything until then.
Stay switched on, keep your eye on the ball so to speak as to what is available out there so that you can make an informed decision when the time comes.