Advice on mortgages greatly appreciated

kellydeedee

Hi there

I am just after a little advice if possible.

Our 5 year fixed mortgage with Northern Rock ends in June so we need to start looking at what sort of mortgages to look at as its a minefield to me.We were on a rate of 6.29% and our monthly payment was £592. We really cant afford to pay any more per month for our new mortgage and would like to pay less if possible as we need to start saving for an extension.

We have an outstanding amount of £102'000 and our house has just been valued at £130'000.

We have a total annual income of £27'000 with no other debts.

We saw a broker today who confimed what we thought and cant get a remortgage to raise enough money for an extension (could only get us £9'000) so he gave us a qoute for a 2 year fixed rate at 3.55 and would cost £469 per month so we would be saving on what we pay now.

I really would like to know whats the best sort of mortgage ?? Is a tracker safe or is fixed rate better ??

We currently have a 3 bed house that we need to extend as we have a growing family and wondered if we would be better going interest only for a couple of years as the quote we had for that would mean a monthly payment of £307 and that way we would be able to save more for the extension then maybe get a better mortgage in couple of years ??

Sorry I have gone on ... just not sure what to do for the best and any advice would be much appreciated

Thanks

Kelly x

CloudCuckooLand

Safe = fixed.

Tracker = taking a chance that rates stay low. But you may be able to save until rates change.

Interest Only = deferring repayment so interest accumlates that otherwise would not. Not ideal. And would likely need to give lender evidence of a repayment vehicle, which would cost as much as sticking with repayment...

How was it valued? Surveyor or EA? Take latter with a pinch of salt. Lender will do their own valuation. LTV may alter, affecting the deals offered.

Thrugelmir

Maintain your monthly payments at the same level i.e. £592 once the fixed term period is over whichever new mortgage product you choose. As the best way for you to save money is to increase the amount of available equity in your property by repaying the capital quicker.

kellydeedee

Hi

Thankyou for taking time to reply

I deffinately think we wont be doing the interet free,Just seems silly.

Think we will go for a 2yr fixed for safety and plan to overpay.

Not sure whether ths is a silly question but when overpaying is it better to pay more each month or to pay the normal monthly amount due by direct debt then save the rest and pay in a lump sum ??

Thanks again

Kelly x