Newby with question :-)

stingebag

Hi peops! Have been following posts on the debt free wannabe section which spured me on to clear a £6k Halifax cc debt I have held foreverrr. Now nearly at the end of that road :j so I thought I would turn my attention to becoming a mortage free wannabe!

Basically would just like to pose one question to you and it is as follows :- Got a mortgage with Northern Rock at 4.09% fixed until Feb 2016. Principle loan £92k and secondary secured loan for £10k for conservatory. 14 years left on mortgage and can afford to overpay be £600 per month. I know I can overpay by 10% per calender year but would it be more advantagious to direct my overpayments to the secured lower amount of £10k or would I just have no choice where the excess amounts are taken from?

Thank you and keep up the good work!. x

dimbo61

If you can get rid of the secured loan first ( I assume that you are paying the same rate on both parts) but overpaying by £600 a month for the next 5 years will have a massive effect on the mortgage balance.
You need to build up an emergency pot just in case and once the mortgage balance has been reduced in a few years you may need to channel excess money into cash ISA,s so you wont end up paying any ERC,s ( 10% overpayment MAX)

stingebag

Thanks for your reply dimbo. Did a quick calculation and realised that after only a few years I would exceed the 10% overpayment barrier. Better crack on and get overpaying as I feel I have been a slave to my mortgage for far too long!

Engeroosi

is it 10% per year?

Froggy-G

I am with Northern Rock and there are no limits on my overpayments at all.. Have you checked recently with them?

Froggy

stingebag

Hi, have just checked with them and its 10% per calender year from the balance as of 31st Dec 2010.

dimbo61

You can use "whatsthecost" website to work out how much your mortgage would reduce each year over the 14 year term and then take off the overpayments £600x12 as a rough idea ( compound interest) but within 3/4 years you would have to start filling ISA,s and thats a GOOD PLACE TO BE !!

stingebag

OMG!! Just sneaked a peak at "whatsthecost" and what a truely miserable amount of interest I will have to pay if I dont kick in with the oping. Just wish I had woke up sooner to this overpaying lark.....really hope I can fullfill this challenge for the good of my family!. x

SAMMYE_2

stingebag wrote: »

OMG!! Just sneaked a peak at "whatsthecost" and what a truely miserable amount of interest I will have to pay if I dont kick in with the oping. Just wish I had woke up sooner to this overpaying lark.....really hope I can fullfill this challenge for the good of my family!. x

Your not the only one. Took me a couple of years and lots of interest before I realised the true cost of mortgages! Just be thankful that you have found out now!!!