Need help with mortgage advice????

DAVESDON

At the moment I currently have a 90% mortgage on my home, joint with my husband.

We bought the house in 2009 for 100,000 with a 10% vendor gifted deposit, making the mortgage 90,000. Repayment mortgage.

The interest rate is just over 7.1%, working out to about £650 per month. Fixed for 5 years, until March 2013.

The ERC is £2,700.

My husband's income is 21,000 and mine is only 3,500 (full time mum)

We want to get out of the mortgage as we still owe 88k despite paying it for almost 3 years. We will fund the ERC ourselves, or add it to the new mortgage if possible.

Just don't know what to do - we need a 5.25% rate or lower to make savings according to the calculator on this site.

I don't want to throw away £2,700 on ERC, yet it seems like we are not paying much capital at all off the mortgage, and ideally we'd like the monthly payments to be lower.

Any advice?

DannyboyMidlands

Do you have a deposit saved or some equity in the property?

Greavesey

Apparently the first few years of a mortgage are mostly interest payments anyway. The amount of interest you pay each month decreased as the total amount of capital decreases. This is over a 25 year period, so the last ever payment will be all capital and no interest. The only way you can increase the equity is by overpaying.

There is a calcultor on line. Just google mortgage amortisation calculator and that will show you how it works

Dont mean to tell you how to suck eggs if you are already aware of this

dimbo61

Is the ERC £2700 for the whole 5 years or does it reduce each year ?

Farmerbob

Greavesey wrote: »

Apparently the first few years of a mortgage are mostly interest payments anyway. The amount of interest you pay each month decreased as the total amount of capital decreases. This is over a 25 year period, so the last ever payment will be all capital and no interest. The only way you can increase the equity is by overpaying.

There is a calcultor on line. Just google mortgage amortisation calculator and that will show you how it works

Dont mean to tell you how to suck eggs if you are already aware of this

Yes as Greavesey says the interest is higher at the beginning then as time goes then the capital increases, so if you do change don't expect to see a huge jump in the calculation of the capital. You LTV is also still quite high so this too will restrict the better interest rates however you prob will be able to get a cheaper rate, but by the time you pay the ERC and any product fee that money would have been better paying off some capital.

Its up to you if still want to move mortgage, but I think you are being blinded by trying to get a lower rate rather than bringing your balance down and then getting access to much better rates. I think you need to be patient!