Advise please on repaying mortgage

bigal1978

Hello i would like some advise the situation is as follows:
I currently owe £137000 on my mortgage with 20 years left to pay, at the moment i am half repayment and half interest only. so the worry i have is in 20 years time i will effectivly still owe £70000 or so .
I have tried alot of companies to remortgage to full remayment with out any success as there is only around 15% equity in the property.

I would like some advise on weather it would be best to make overpayments or invest money elsewhere, or anything else anyone could suggest. I could afford around £30 per week

Phelpsie001

It really depends what rate of interest you are paying? I pay almost 6.6% so my best investment is to pay any amount off my mortgage....sometimes only a few pounds a month but it soon adds up

TrickyDicky101

You'll need to pay more than £1560 per year in overpayments to clear a debt of £70k in 20 years. Anything you can overpay now will certainly help but you will need to make arrangements to overpay by more - without knowing your interest rate it's a stab in the dark but at 5% interest on the £70k interest-only portion you probably need to be overpaying by a total of £170 per month so around £50 per month more than what you were proposing.

If that's do-able, you will clear the debt in 20 years (dependent on interest rates/exact term/exact balance outstanding).

bigal1978

The exact balance is 137300 and the interest rate i think is not fixed at 2.5% above base rate. I will chek this


I would say £30 p/week is my top amount i can repay.

TrickyDicky101

Best to start overpaying now and increase when possible in the future. It is possible to get a higher return than 2.5% currently in other savings so you could consider saving into an ISA (rather than overpaying) and then transferring the savings to the mortgage if and when the mortgage costs exceed the investment returns. I think at 2.5% savings will be marginal though so I would probably just overpay on the mortgage.

Phelpsie001

Plus if you overpay ... you own a tiny bit more of your house each month

bigal1978

Spoke to morgage company and they have advised me that if i over pay by £120 per month at the end of the 20 year term i will only owe them £14000 and will save me £19000 in interest does this sound about right because if so i think this maybe the way forward. Bare in mind the fiqures were forcasted by todays interest rates (which she confirmed are 2.49% above base rate).

beecher2

Since you're on a variable rate it isn't much use to project using today's base rate figures, particularly as they can only go one way. Overpay what you can now, and try to find a way to increase your overpayments in the future.

TrickyDicky101

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Joe_Bloggs

I do not get the numbers. There is no way than an extra 120 a month on 70,000 @3% interest only can turn into 14000 after 20 years. More like 30.5K.

Interest per month on 70K @ 3% is 175. Add 120 gets 295 per month.

If this amount is paid regularly then the interest only part becomes a repayment mortgage that would eventually be zero in 30 years. The balance after 20 years is 30.5K

Full repayment of 70K @ 3% over 20 years requires a monthly repayment of 388 per month.

Are my numbers very wrong ? Perhaps bigal1978 can mention what the actual repayments are ?

J_B.

getmore4less

I make it

£70k @3% £175pm

over 20y £388pm

paying £295pm after 20y £30600