Which mortgage to overpay and are we on right one?!

Ivrytwr3

Hey all,

First time we've ventured in here and would appreciate some advice. We bought a property in 2005 and were on a 5 year fixed - this expired in Dec 2010.

We then sold that property and bought another in Oct 2010 at a higher price. We ported that mortgage and got another to cover the full price of the property at 85% LTV.

So we now have 2 x mortgages for the same property (with me so far?!)

Loan Amount: £145,562
Repayment Term: 25 years.
Repayment Method: Repayment
Purchase Price: £171,250

Thismortgage is provided by Alliance & Leicester plc.

Part 1 of 2

Loan Amount: £69,955.00
Repayment Term: 25 years
Repayment Method: Repayment
Initial Rate Payable: 4.24%
Product Description: Porting Lifetime Tracker
The Base Rate Tracker rate is a variable rate which is 3.74% above the Bank of England base rate,
currently 0.50%, for the remaining term to give a current rate payable of 4.24%.

Part 2 of 2

Loan Amount: £75,607.00
Repayment Term: 19 years
Repayment Method: Repayment
Initial Rate Payable: 4.54%
Product Description: 5 Year Fixed Rate
The fixed rate will be 4.54% and will end after 3 months. (Fixed until 31st December 2010.)
When the fixed rate period expires we will charge interest on the money you owe us at
the following Base Rate Tracker rate, which is a variable rate which is 0.75% above the Bank of
England base rate, currently 0.50%, for the remaining term to give a current rate payable of 1.25%.
.
Overall cost of this mortgage

The total amount you must pay back, including the amount
borrowed is:

£200,741.65
This means you pay back: £1.38 for every £1 borrowed.
The overall cost for comparison is: 3.1% APR
The figures in this section will vary following interest rate changes and if you do not keep the mortgage
for 25 years.

Thereare no restrictions on making overpayments on part 1 of your mortgage.

You can make overpayments on part 2 of your mortgage but an Early Repayment Charge will be
payable on any overpayment made during the Early Repayment Charge period.

When the Early Repayment Charge period has expired, any overpayments that you make will not be
subject to an Early Repayment Charge.

Overpayments of less than £500
If you make a regular or lump sum overpayment on your mortgage (that is, an overpayment which is
less than £500), the amount you owe, and so the amount of interest you pay, is not recalculated
immediately, but at the end of the month in which the overpayment is made.

Overpayments of £500 or more
If you make a capital payment, the amount you owe, and so the amount of interest you pay, is
recalculated and reduced on the day immediately following receipt of such payment. This provides
you with a benefit from such date.
However, on part 2 we allow you to make one penalty-free overpayment in every January that falls
within the Early Repayment Charge period on the condition that the amount is £500.00 or more over
the monthly payment due each January.

The overpayment shall not exceed 10% of the amount outstanding on your mortgage account at the
time it is made, subject to being a minimum amount of £500.00.

The overpayment will result in both the amount outstanding on your mortgage account and the
amount of interest you pay being recalculated on the day immediately following receipt of such
payment. This provides you with a benefit from such date.

If the overpayment exceeds 10% of the amount outstanding on your mortgage account, the full
amount of the overpayment will be applied to your mortgage account. However, the amount which is
over and above 10% of the amount outstanding on your mortgage account will be subject to
payment of an Early Redemption Charge in accordance with the provisions contained in Section 10.

As a mortgage newbie, we would like to know:

1. Can we get a better mortgage deal or should we stay where we are at?

2. If we were in a position to make overpayments, which one do we overpay?

b. Do we overpay a lump sum each January? Each month? Or both?

3. We overpaid a few times on the last mortgage and it was a bit of a pain. They were asking if i wanted it paying off the interest, the capital, do i want to reduce the term or the payments. AAAARRRRGH!! I just want to reduce the amount i owe! What do i need to say?!

4. Any major problems with what you have seen above?!

Many, many thanks to all who can offer any help or advice!

Ivrytwr3

no mortgage experts in then?! lol

lincoln-potter

If you bump the thread in the evening there are more people online then to give you an answer, otherwise as you found your thread might slip onto page two and won't be read by many.

Also you may find more success on the mortgage thread as opposed to the MFW.
http://forums.moneysavingexpert.com/forumdisplay.php?f=15

Now I am no expert by any means, I simply know my own mortgage and finances in depth so this is just my opinion to your questions:

As a mortgage newbie, we would like to know:

1. Can we get a better mortgage deal or should we stay where we are at? Sorry I am not fully up on current mortgage deals.

2. If we were in a position to make overpayments, which one do we overpay?
You should overpay mortgage one (idue to term length and current rate of interest)

b. Do we overpay a lump sum each January? Each month? Or both?
Pay as often as you are able to, the majority of mortgages are subject to daily interest. So monthly OP's save more than one annual OP.

3. We overpaid a few times on the last mortgage and it was a bit of a pain. They were asking if i wanted it paying off the interest, the capital, do i want to reduce the term or the payments. AAAARRRRGH!! I just want to reduce the amount i owe! What do i need to say?!
You want to ask to reduce the term whilst keeping your monthly amount the same.

4. Any major problems with what you have seen above?!


Many, many thanks to all who can offer any help or advice! Last edited by Ivrytwr3; Yesterday at 4:40 PM.

Ivrytwr3

thanks for that. I will also do a bump later tonight!

Ivrytwr3

*bump*

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dimbo61

Agree with LP that you overpay the part one as you are paying 4.24% on that part.
try and set up a DD to overpay as much as you can afford each month and ask for the mortgage payment to remain static so you are reducing the term.
you have a £145K mortgage which is tracking the BOE base rate so make hay while the sun shines and overpay!
Dont worry about the (repay £200K over 25 years bit as OP,s will reduce the interest you pay big style)
Build up savings upto £16K as an emergency fund
You dont give the LTV or value of your property but if you could get another 5 year fix on the more expensive part which you are paying 4.24% on now this would give you some security!

Ivrytwr3

We are now looking to fix the first part of the mortgage for 5yrs. It was originally 85% LTV with Santander.

Any advice on what mortgages are out there at the minute?