Lump sum to mortgage?

hobo123

Hi

I am looking for some advice regarding my mortgage, I am currently on a fixed rate which doesnt end until 31/10/12 the rate is 6.08% and I pay £567.12 per month.

I want to pay £40,000 to my mortgage but would like to reduce my monthly amount rather than my term (obviously still allowing for possible overpayments to reduce the term in the future) My problem is obviously Ill have an erc on this if I repay of 3%

Dont know where to start do I take the hit of the erc and transfer my mortgage as Id probably get a better rate now on the remaining balance. Is this possible?

Any advice greatly appreciated really dont know what to do and my head is spinning with it all

getmore4less

not enough info.

Mortgage size

ouse value

Followon rate

income

getmore4less

Seperate to the above.

Why do you want to reduce your payment?

hobo123

Hi

House value £110000
mortgage remaining £82000
repayment date september 2032

I want to reduce my payments as I have just received ill health retirement from my employer and obviously my income is not substantial so want to make sure my monthly payments are as low as possible so that we are not overstretching ourselves on a monthly basis.

getmore4less

This needs a lot more planning before you blow £40k with a 3% fee.

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

With things like state pension, and can you do any work.

You say we can the wife work

Any othe capital needs like fixing up the house new car.

any benifits,

ViolaLass

Rather than paying an ERC, why not use the £40,000 to pay the mortgage each month? It will save you slightly less interest but probably cost you less than the ERC.

Does the ERC cut in straight away or could you make smaller overpayments for no charge?

hobo123

I can pay 500 per month without being charged but i am wary of having the money in savings incase im tempted to spend it. Does having savings affect benefits ie. Family tax credits incapacity?

Thanks

getmore4less

hobo123 wrote: »

I can pay 500 per month without being charged but i am wary of having the money in savings incase im tempted to spend it. Does having savings affect benefits ie. Family tax credits incapacity?

Thanks

Deprivation of capital is a potential issue with benifits.

That why it needs more thought.

hobo123

Could you elaborate please

dimbo61

We could ask a thousand questions and still not have all the info we need to give you the right answer!
You need to talk to CAB and speak to a debt counsellor to work out the best plan of action
Income ,age, job, disability, chances of getting another job, wife/husband and there income, benefits,
you need to look up deliberate depravation of assets on the benefits website.

You also need to talk to your mortgage lender ( can we pay a lump sum off the mortgage? without paying an ERC) some allow £500 a month and some allow 10% of the capital each year.
Now you also need advice about the pension and lump sum your employer is offering you!
Do you take a bigger/smaller lump sum now and a smaller pension or a bigger pension ?
your age is very important if you are 48 and male then you will have to wait until you are 68 to get a state pension so a bigger pension might work out better