Thoughts on Mortgage quandry

natman

Hello.

Quite a complex situation but would really value your thoughts.

our house is worth £210,000. Our total Mortgage provided by Britannia Building Society is - £89,000.
For Info I also have £30,000 in savings

However our mortgage has 2 sub accounts -
part 1 - base rate tracker of +0.75%(rate is currenty 1.25%) owing £23,000
part 2 is fixed at 5% owing £66,000.

Our Fix rate stops in January and it goes to SVR currently at - 4.24%

I really like part 1 product of base rate tracker and ported this product over when we moved and I am reluctant to lose it. But this means staying with Britannia on either SVR or opting to chose another fix rate product and to be honest their rates are not that great -at about 5.14%.

These are my thoughts -

1. Look at complete remortgage with whole of market providers. But I dont really want to lose the 0.75% tracker.

2. Stay with Britannia on tracker and part SVR for ultimate flexibility - pay off extra etc

3. stay with Britannia keep base rate tracker and see if I can commence a new fix rate for the £66k


In addition I could use some savings to reduce the mortgage, but My savings currently receive around 3.5% interest tax free due to ISA wrapper. Therefore It is very finally balanced as to whether paying off the mortgage would be the right decision.

I suppose my question is - if you were in this position what would you do? would you do any of the above options? would you carry out another alternative?

Thanks for your help.

TrickyDicky101

Have you made any overpayments on the part I tracker portion of your mortgage? If so, I would find out if you can borrow against this 'over-payment reserve' (and pay off the borrowings against your part II mortgage - when out of ERC territory obviously). I have this facility with my Nationwide mortgage and it has come in very handy whilst I have been looking to extend my mortgage to purchase another property.

natman

No I have not overpaid on part 1. I have however overpaid on part 2 now and again, you can over pay £499 a month if you wish. I have done it a handful of times, But I might start this again in preperation for a change of product etc.

I am reluctant to get rid of part 1. I could in theory pay this off, bit with it only being 1.5% interest It is a very cheap. considering i get 3.5% on my savings.
Thanks for the reply

Thrugelmir

natman wrote: »

but My savings currently receive around 3.5% interest tax free due to ISA wrapper. Therefore It is very finally balanced as to whether paying off the mortgage would be the right decision.

Your fixed rate incurs a true rate higher than 5%. As the mortgage interest is calculated and charged monthly.

I would overpay the fixed element by the amount you are allowed to and that you can comfortably afford.

Reviewing the situation when the fixed term comes to its end.