trying to reduce mort interest as much as poss do you think this will work?

kazzys51

hi all , we have a mort with n wide of £26000 , the term is 3.5yrs ish remaining my fixed rate is due to end sept :jits been 5.78:eek:

we will be going on to the base rate of I think 2.5% which im thinking of keeping on this variable rate and trying ti op as much as we can.

the max amount we can really pay all in is £600 p month so this is what i was thinking.......

changing the term up to 25 years which will give me a monthly bill of £117 then making a op of £483 ea mth, because nationwide dont charge int on overpayments made.

i think it will really only save about 450.00 over 3 years on interest but by doing the payments/term in the oposite will cost 450 more in the long run..... if my calculations are right i cant find a op calculator that works this one out:rotfl:

im hoping one of you guys will soon correct me if not so:) be gentle

thanks for your time:)

kazzys51

why would 80 people bother to view ??

Hugbubble

kazzys51 wrote: »

why would 80 people bother to view ??

I honestly couldn't really follow what you were asking. A lack of punctuation didn't help.

My maths is rubbish and I'm a bit too busy at work, but I hope someone comes along to give you the answer you want soon

Brodiebobs

i dont understand how increasing term from 3.5 yrs to 25yrs will save you money as you'll be paying longer!?

Surely if they dont charge extra for overpayments just overpay as much as you can afford to when you come off the fix.

(unless i read it wrong as quite hard to follow!)

use the overpayment calculator on the mortgage banner at the top and you can work out what the payment will drop to (compare two mortgages) then subtract the new figure from the £600 you can afford to overpay then this gives you the amount to put in the overpayment calculator, along with your 'new' monthly payment, which will show how balance will decrease.

edited to add are you on interest only as the mortgage calc said your payment must be about £780 a month at the moment??

kazzys51

Sorry mabey i should have added that my current monthly payment is £560.00 pm, and with me only op £40 on that figure in effect its only the £40 that will be interest free.

Whereas the other way will be £467.00 interest free pm.

(dont worry about being rubbish at maths! I'm rubbish at punctuation!:))

when you have a fixed rate with nation wide the max you can op is £500 and with my payment already £567,there will only be 2 more payments of this anyway or as ive just found out on the phone I can pay £20 change the term to 30 yrs which will reduce my mthly payment to £102 then op £498.00 monthly tot will be £600 still the same, but the difference is the interest will reduce the term automatically.

Brodiebobs

but if thats repayment it'll be paid off in 3.5 years, or sooner if overpayments are made too.

Hugbubble

I still can't follow what you're asking really...

But simple answer is that you'll pay less interest in total the sooner you pay it off, not by extending the term.

You say "Sorry mabey i should have added that my current monthly payment is £560.00 pm, and with me only op £40 on that figure in effect its only the £40 that will be interest free"

The payment itself isn't interest free. The payment (£560) represents the monthly interest plus a contribution towards the capital (the mount you actually owe). By overpaying by £40, you will reduce the interest bit by bit because this £40 is coming straight off the capital

kazzys51

yes it is repayment

kazzys51

I still can't follow what you're asking really...

But simple answer is that you'll pay less interest in total the sooner you pay it off, not by extending the term.

You say "Sorry mabey i should have added that my current monthly payment is £560.00 pm, and with me only op £40 on that figure in effect its only the £40 that will be interest free"

The payment itself isn't interest free. The payment (£560) represents the monthly interest plus a contribution towards the capital (the mount you actually owe). By overpaying by £40, you will reduce the interest bit by bit because this £40 is coming straight off the capital



yes so if the £560 is paying capital and interest and the £40 is straight off the capital (interest free) then does it not make more sense to pay a smaller amount to the capital and interest (£102) and overpay £498 and have that come straight off the capital saving more in interest!

Brodiebobs

TBH running the figures through an overpayment calculator its not that much different if you leave it as it is now and OP the £40 it knocks 4 months off the remaining term and saves you about £60 in interest, and the other option of extending the term pays it off in about the same time.

I'd be more concerned that the company may charge you to increase the term, then charge you again if its paid off early.

And with the rate being so low at 2.5% you might be better not overpaying and saving the £40pm in an ISA you can get some aroung 3.5% now, then paying it off if/when the rate rises.

kazzys51

yes ! know it only a wee bit but everylittle helps and i asked if this costs extra and its a one off of £20 which i have to pay anyway for a withdrawal .