Newbie needing advice please.

wheatchief

Hello everyone, i've been viewing this site for along time but never got round to registering.

I need advice with the following matter please.

I've been on a 5 year fixed rate mortgage at 6.49% (yes i know, i missed out big time with the recession,:() that is due to end in July this year. I'm already overpaying by £85 a month and still have 92,000 outstanding. We are looking at moving house hopefully in the summer of 2012 and are trying to save at least £10,000 for a deposit, we have £1,500 saved from January alone that is not in a savings account just a standard bank that i need to look in to, but are we best to save for the deposit or should i be paying this off the mortgage.

By using the mortgage calculator, paying off the £1,500 we have at the moment would save just over £5,000 in interest.

I would appreciate any help and advice, thank you.:)

ryan86uk

Paying off your mortgage as the interest rate you're paying on your mortgage is in contrast far higher than the interest you will gain by saving.

lincoln-potter

wheatchief wrote: »

Hello everyone, i've been viewing this site for along time but never got round to registering.

I need advice with the following matter please.

I've been on a 5 year fixed rate mortgage at 6.49% (yes i know, i missed out big time with the recession,:() that is due to end in July this year. I'm already overpaying by £85 a month and still have 92,000 outstanding. We are looking at moving house hopefully in the summer of 2012 and are trying to save at least £10,000 for a deposit, we have £1,500 saved from January alone that is not in a savings account just a standard bank that i need to look in to, but are we best to save for the deposit or should i be paying this off the mortgage.

By using the mortgage calculator, paying off the £1,500 we have at the moment would save just over £5,000 in interest.

I would appreciate any help and advice, thank you.:)

Hello wheatchief,

Welcome to MSE, regarding your potential move the current housing market makes it a pretty tricky thing to guess when you will sell. And for taht reason alone I would personally make as many OP as you could whilst slowly building up funds to cover your legal fees.

Whats the amount you are able to save most months?

wheatchief

Although paying it off the mortgage is the best thing to do in regards to the interest i would save, how will that help me when i need the deposit for the next mortgage/property?

Thanks for the quick reply though ryan86uk and lincoln-potter

wheatchief

depending on the month, between £500 - £1000 or what ever i can.

ryan86uk

wheatchief wrote: »

Although paying it off the mortgage is the best thing to do in regards to the interest i would save, how will that help me when i need the deposit for the next mortgage/property?

Thanks for the quick reply though ryan86uk and lincoln-potter

Well assuming you will be selling your current property to fund the purchase of your new property then the £1500 will still act as £1500 towards your new property whether you pay it cash or off your old mortgage. Same difference except you will save X amount on interest if you pay it off your mortgage in between time.

lincoln-potter

wheatchief wrote: »

Although paying it off the mortgage is the best thing to do in regards to the interest i would save, how will that help me when i need the deposit for the next mortgage/property?

Thanks for the quick reply though ryan86uk and lincoln-potter

well you mention that your current term ends this summer which leaves you a whole year (fingers crossed) with a lower rate so your monthly excess should grow.

If you are concerned about saving enough for legal fees then why not do a 50/50 split with the money untily uo reach 10k and then put 100% into OP's?

ryan86uk

Not a bad idea lincoln-ptter, good advise.

I would probably do the same in that situation.

wheatchief

Thanks again for the reply, we have decided to pay the £1500 off the mortgage and then again what ever is left at the end of every month. i will update my signature soon. The 50/50 split that was mentioned is a fantastic idea and given the amount of time we have until we are able to move I'm sure we can put some aside for legal fees. Maybe 60% mortgage, 40% fees or more mortgage, just have to see how it goes.

Thanks again for the replies.

Engeroosi

So is equity in a house regarded as a deposit when you come to remortgaging?

wheatchief

I'm not sure but that's what I'm hoping. be good to find out. I called my mortgage provider and made a payment for £1500 so i guess my plan to be MF is on its way. Just need to sort my signature now.