Ok Tell Me Where I have Gone Wrong

beecher2

Why not ask your present lender if you can go interest only? When working out how much you'd potentially save by moving, you need to compare like with like which you aren't doing at the moment as you're comparing repayment with interest only.

mascott514

getmore4less wrote: »

mortgages owing in 18 months.

£219601 @ 5.95% paying £1854 £205,232.29 (normal repayment £1567)
£227309 @ 4.45% paying £1854 £208,524.72 (normal repayment £1434)
So after 18 months you are still £3300 behind.

So you are taking a bet that rates will have gone up enough that you save that over the following 3.5 years, work out the rate you would need to be paying to break even in another 3.5 years


Why cant you have the wife pay off the debts and you pay her back from the money?.







No point in saving the £500pm over 5 years you will get less than the mortgage rate on the money so might as well pay it as you go rather than at the end of 5 years.

I guess thats what I want to know, do we (I) think that rates will rise enough to justify the outlay at this stage.

Wifes money... not out the question, but I would like to avoid if possible

Now I see that paying off capital directly each month would be favourable to saving and then paying off a lump sum at year 15 to go.

ViolaLass

getmore4less wrote: »

Why cant you have the wife pay off the debts and you pay her back from the money?

I second this bit, it seems less complicated.

mascott514

ViolaLass wrote: »

I second this bit, it seems less complicated.

Essentially, we want to do whatever works out best, so its not ruled out.

We could both do with a little bit of extra income currently, but we dont want to end up with our mortgage being worse off than now. My loans are paid off in 4.5 years, And the idea is to buy us a little breathing space.
But, I am also concerned that the rates of mortgages are going to rise, meaning that a fixed rate deal in 18months wont be that much different than now.

None of the situation is absolutely desperate, in that we can afford our debts, and don't miss payments etc, but we would like to see if we can ease our monthly cash flow whilst improving our lot overall....

getmore4less

How big and what rates are your non mortgage debts that will take 5 years to repay?

At the end of the day it is the net position in 5 years that matters

mascott514

Havent got the rates, but they were reasonably competative,
Overall,

About 20k, and out going about £400, for 4.5 years, not 5 as stated previously.

I dont really want to saddle our mortgage with the debt, as I am managing ok, and essentially, I like to pay my way, and My wife never has personal debt apart from our house.

mascott514

getmore4less wrote: »

How big and what rates are your non mortgage debts that will take 5 years to repay?

At the end of the day it is the net position in 5 years that matters

Absolutely,

I can manage my personal debt now, but would like to have a little cash flow, but I really want to be in a position where our mortgage debt looks healthier in 5 years.

I didnt have any knowledge of the market regards interest only products so it might be we have no chance anyway.

Awaiting a call from L and C....they did our last deal...

getmore4less

About 20k, and out going about £400, for 4.5 years, not 5 as stated previously.

So average of around 3%(are you sure) so better than the mortgage but still costing £1400 in interest.

I would have a look and see if any are higher than the mortgage and selectivly pay them off keeping the others.


What rate are the wifes savings gettinig, perhaps use them to pay off her share of the mortgage and reduce her share of the monthly payments.

What are your joint plans should one of you lose a job emergncy funds etc.

mascott514

That seems wrong!

I pay out £420 pm, and I have about 54 months to go

That makes £22680 , slightly different that previously suggested!

getmore4less

that tells you what you wil pay not what the redemption/rates on the debt are which is what is important in the planning.


you said earlier.

but I really want to be in a position where our mortgage debt looks healthier in 5 years

your approach(interest only) will make it worse than it would be if you staid on repayment.

If looking for breathing space, find cutbacks from expenses.

have you got a budget and done a SOA?
http://www.makesenseofcards.co.uk/soacalc.html

Any sky/cable, mobiles, expensive cars, gyms, holidays, takeaways, eating out. etc.


Have a look at snowballing techique to get an idea on how to tackle debts including mortgages.