Feels like an impossible task...

kiran83

hi gizmol111- i don't like online banking. Call me old fashioned but I prefer going to the bank myself as even though we have anti virus software, I don't know why! And as I do shift work and use public transport, I cant always get to the bank in time. And I know that statement alone should make me want to do online banking but I just don't feel comfortable with it. Each to their own I guess.

kiran83

hi ViolaLass, do I need to tell BM that I want to reduce the term ASAP or can I do that later on? I guess I would like to make about a years worth of op's before I change any of the conditions of the mortage. I know it sounds a bit backward, but I guess I would like to make a significant op before changing anything.. will that have a negative effect on how we would save in interest if we dont tell BM straight away?????

lincoln-potter

kiran83 wrote: »

Hi Violalass, the man from BM said that the op's would reduce our monthly payment. And we have come out of our fixed rate tracker period and so have no limits or penalities as to any op's we wish to make. Just have to take the first step and make the first payment!

If you can easily afford your current repayment rate (which you would need to in order to make OP) then i would suggest asking them to reduce your term rather than your monthly amount.

Since you are not currently tied in I would make as many OP's as you possible can now before entering into another FR. Having an emergency fund is always best but having too much in is a wate (in my opinion) have you worked out what your minimum amount you would require would be?

ViolaLass

kiran83 wrote: »

hi ViolaLass, do I need to tell BM that I want to reduce the term ASAP or can I do that later on? I guess I would like to make about a years worth of op's before I change any of the conditions of the mortage. I know it sounds a bit backward, but I guess I would like to make a significant op before changing anything.. will that have a negative effect on how we would save in interest if we dont tell BM straight away?????

It's best to talk to the bank about this directly as they may have different procedures (and I can only talk generally). They may require you to phone them/tell them every time you make an OP that you want the term reduced. It may be that you can get a note put on your records so that they do it automatically.

If you don't tell them anything and they reduce the monthly payment, rather than the term, this has the effect of cancelling out some of your overpayment.

Let's say your mortgage costs £100 a month. You overpay £1000 one month, which over 25 years means your monthly payment only needs to be £90 from now on. The bank reduces it meaning that you are keeping £10 a month. (all numbers made up but I hope it gets the idea across). If the monthly payment stayed at £100, then that £10 would be like an extra overpayment.

gizmo111

I just asked them not to change the normal amount on my DD when I made overpayments, only to change if the rates changed - if that makes sense.

kiran83

Hi Linciln Potter, as our rate at the moment is 2.49 we dont intend to enter into a fix rate umtil it rises to about 5%. I guess six months of mortage payments £958x 6 months£ 5748 plus bills etc , so i guess we need about £8,000, thats our emergency fund. We have that in the cash isa so everything else could go toward op's.....

ViolaLass

If the DD stays the same (when rates don't change) then that will have the effect of reducing the term. Worth keeping an eye on the DD though, just to be sure that it's stayed the same. Other than that, good work, you'll be rid of the mortgage in no time!

kiran83

gizmo111 wrote: »

I just asked them not to change the normal amount on my DD when I made overpayments, only to change if the rates changed - if that makes sense.

Yes that does make sense and i think i will need to give them a call about it before I send any cheques off to them for op's.

kiran83

ViolaLass wrote: »

If the DD stays the same (when rates don't change) then that will have the effect of reducing the term. Worth keeping an eye on the DD though, just to be sure that it's stayed the same. Other than that, good work, you'll be rid of the mortgage in no time!

thanks for the advice, still feels a bit daunting, but I have made up my mind to give it my best shot.... fingers x:j

kiran83

there is one thing i would like somebody to explain to me. I have read somewhere on the forum that if you make overpayments then you could get a bad credit rating or something to that effect. Is this correct????