Help me figure this out....MFW

freddykrueger

Hi Folks

I read all the posts on here with great interest - basically here is my situation:

Mortgage outstanding circa £42,900 with a term remaining of about 10.5 years.

Current mortgage payment is £427 per month as I am on a tracker rate that comes to about 2.79% - this finishes in September at which point I would imagine I go back to BMR - I am with Nationwide.

I am currently paying £700 per month to the mortgage and considering upping that to £850 to start paying quicker - ideally I would like to pay off my mortgage in between 4 and 5 years. I will probably move house again at some point at which point I will be MFW again!!

I have savings of around 15K in an ISA with Scot Widows at present and about another 12K in general savings which is not really working for me at present but about to move some of that into new ISA year.

Would a figure of £850 per month allow me to reach my target or thereabouts?

adwat

If you use your savings to reduce the mortgage and make monthly £850 payments then you will finish your mortgage in about 19 months.

freddykrueger

adwat wrote: »

If you use your savings to reduce the mortgage and make monthly £850 payments then you will finish your mortgage in about 19 months.

Now that is a scary (and exciting) fact and I would consider that but like a lot of people have mentioned its good to have a savings buffer and that's why I haven't went down that route.....is this something that I should consider?

adwat

Of course, you could keep 6 months of payments in savings and pay the rest off the outstanding capital whilst making your overpayments and then pay off the balance in just over 20 months - as you'll pay slighly more mortgage interest over that time.

originalmiscellany

Do it! You'll be grateful if you can clear it from 10 years 10 under 2 years - think of the freedom you will have for the other 8 years. Just amazing.

A decent buffer (6 months mortgage/bills etc is needed).
If you have some savings, you could overpay and save a bit until your buffer is complete, and happy days.
If you can, work out what you will save in terms of interest over 2 years as opposed to 10 - that will be the incentive enough to focus your mind

Best of luck.

dimbo61

For me the magic figure is £16K ( think benefits) now as you are only paying 2.79% on the tracker and may/will move back onto the BMR of 2.5% ( at the moment!) I think you should get at least 3% in a cash ISA.
You already have £15K tied up in a ISA? ( cash or shares) and this I would keep as long term savings plus a few £K in cash ISA,s then overpay the mortgage as much as you can

freddykrueger

dimbo61 wrote: »

For me the magic figure is £16K ( think benefits) now as you are only paying 2.79% on the tracker and may/will move back onto the BMR of 2.5% ( at the moment!) I think you should get at least 3% in a cash ISA.
You already have £15K tied up in a ISA? ( cash or shares) and this I would keep as long term savings plus a few £K in cash ISA,s then overpay the mortgage as much as you can

Its 15K in a cash ISA with Scottish Widows paying I believe at the moment 2.49% so was planning to move it. The 12K extra I have I can't put into the mortgage until current tracker deal completes as I am only allowed to do maximum £500 overpayment per month.

dimbo61

well £43K at 2.79% over 5 years works out at £770 a month so if you can OP by £400/450 a month you will be mortgage free in less than 5 years

freddykrueger

Well I have just phoned Nationwide tonight to increase my monthly payment to £850 effective start of April - this is an overpayment of £423 per month so still under the £500 per month I am permitted without penalty.

Current tracker deal expires at end of September.

dimbo61

If you then go onto the BMR of 2.5% great carry on building up ISA savings and overpay as much as you can afford while still having a LIFE! if it goes onto the SVR of 3.99% then you may need to pay a lump sum off with your savings ( but keep the £16K emergency pot)