Should I pay off my mortgage? Discussion area

Neyori

Hi people

Thanks for all the useful comments that have been posted on this site.

Just joined today and looking for some useful advice on my current situation and the merits of overpayment.

Here goes:

I took out a 30 year Repayment Mortgage last year July for £119,425 + £995 (product fee) + £245 (interest free fee) fixed for 2years @ 4.64% and Standard Variable Rate (SVR) of 3.99% for the remaining period.

Initial monthly payment was £613.94 but I got a letter in April this year that my payment had been increased to £619.74 because of a mortgage interest rate change.

I challenged the bank on this (the rate was supposed to be fixed for two years?!) but was told that what changed was not the fixed rate but the SVR from 3.55% to 3.99%.

When I checked my mortgage papers again, I confirmed that the SVR indicated for my account was 3.99% and couldn't understand what had changed and took the bank on about this.

The bank then gave a different line that it was because the product fee was added to my mortgage from the outset, and they had to increase the monthly repayment so I could pay off the balance within the 30year period.

Is this right?Should my monthly payments change during a fixed period and when there has been no change to the future SVR that would apply to my account after the 2year fixed term?

Secondly, I've made overpayments of about £1,000 (£500 in April & June) without missing any single month's payment, yet, it seems the balance is not going down at any decent rate and current balance stands at £117,265.32.

I want to make as much overpayments as I can afford but it just seems the balance is not coming down any quicker with the previous overpayments made...

Thanks

homeoffice2020

Hi Guys,

I have an interest free purchase credit card with a 12 month term for purchases ana £3500 limit. I have no other debts apart from an outstandin amount of £9000 pounds, can I use the credit cards interest free purchase option to pay a chunk of this or is this not possible. The card s wit barclays and the mortgage with nationwide.

I pay off all my cards within the specified term.

Help would be appreciated....

badobsession81

homeoffice2020 wrote: »

Hi Guys,

I have an interest free purchase credit card with a 12 month term for purchases ana £3500 limit. I have no other debts apart from an outstandin amount of £9000 pounds, can I use the credit cards interest free purchase option to pay a chunk of this or is this not possible. The card s wit barclays and the mortgage with nationwide.

I pay off all my cards within the specified term.

Help would be appreciated....

Hi homeoffice, unless anyone corrects me otherwise, I don't think this would be possible - you may find that you are not able to make a payment to your loan using another credit facility, and even if you did, it would probably not count as a 'purchase' on your card.

I have been creative before though, with balance transfers etc. - Egg used to allow you to tfer to a current account, so I would sometimes use a 0% offer to get cash and then use this to pay down other debt if a direct balance transfer wasn't appropriate.

It would be worth checking your terms to confirm you aren't able to do something like this with a 0% balance transfer...

Hope that helps (a bit)... maybe you could let us know which card you have and others may be more familiar than me with what you can and can't do....?

HTH

homeoffice2020

Hi badobsession81,

Thanks for the reply, your probably right about not using the interest free purchase option to pay the mortgage.
I have also used cards like Egg, MBNA to balance transfer money from the card to current account, but unfortunately I've maxed those cards out in the past and I'm finding it difficult to reapply for credit cards even though I have an excellent credit rating.....

Ive expired the balance transfer on my card because I only really signed up for the generous interest free purchase on it.

Shellebell21

I have a part repayment part interest mortgage, due to finish in 7 years. the interest part was due to taking an endowment 24 years ago, the endowment is now due to mature with a considerable shortfall. do I first of all have to pay this towards my mortgage and secondly would I be better paying off credit card debts.

osomdarling

Hi,
We have a mortgage of £59000 outstanding on a £250000 house and we want to move house. We also have substantial amount in our saving which can pay off the mortgage. Our main concern is that, should we pay it off, we may not have credit with lenders as we wouldn't have a mortgage. Do you think we should just pay it off an start all again?Thanks

Osomdarling

Mobeer

In year 15 my remaining debt will be £5,042,726,001,590,484,415,657,254,530,560,268,522,215,847,124,486,127,213,063,079,723,008.

Ok, so I did put the wrong interest rate in (2049 not 2.49 %) but even so, given this is a repayment mortgage the total should be less than it is now. Some bug is striking large interest rates.

Uffy64

Bit confused as to wether or not to pay off my mortgage. Currently I'm on 1.6% capital & repayment mortgage. I have an ISA which currently leaves me £8k short of paying off my mortgage. Should I wait another year or try and get 2 credit cards with 0% finance to cover the £8k and clear the debt? In another year i would hopefully clear the mortgage with the ISa cover....which is best. Wait a year or try and get the £8k on a card?

Sepa74

Hi,

The aim of the game is to maximise your wealth. Your interest rate is so low that you are better off NOT paying your mortgage, at least until interest rates rise substantially as you will be able to earn significantly more interest on savings than you are paying on your mortgage.

I would also strongly advice against using your ISAs to pay off your mortgage as they will provide a very handy source of tax free income when you retire.

My suggestion is continue filling your ISAs each year, and then put the balance of any money you save into the highest interest savings account you can find.... when your mortgage rate is higher than the interest on these accounts (but remember you will pay tax on the interest on these accounts, so it's not a straightforward comparison), then you can pay the money on to the mortgage.

Don't use the ISAs to pay off your mortgage, keep them as retirement savings, particularly if you don't have much by way of other pension.

I hope this helps!

SAPPY

I have £308K outstanding on my mortgage. This is currently on a fixed rate until 2 Oct 2012. (3.74%)
I also have an endowment (Standard Life) which I retained when I cleared the mortgage against a previous property. My original plan was to retain the endowment in the vain hope that is may make up the shortfall - it matures in 2018 - and add this to our pension pot. The original projected maturity value was £62K.
However - in order to access better mortgage rates - (3.99%) I need to make a fairly substantial capital payment on my mortgage.
I can only surrender my endowment policy to the originating company - this is currently valued at £23K (just enough to make the capital payment required) and we will add an additional £10K to reduce loan amount further.
My question is - do I surrender the policy or make the capital repayment from our savings.
I have been reminded by Standard Life that I would not qualify for the 'mortgage promise' unless the policy is held for the full term. (The mortgage promise is an additional payment that they may make at the end of the policy term - however this is not guaranteed).

Any advice would be welcomed.

Thank you