4 part mortgage - advice

smitchy73

Yeah I know it sounds complicated. We initially started with a £30k interest only mortgage and still have this, we then took out another three equity releases(yeah I know:() over some years, hence the 4 parts.

Three of these were on fixed rates, which over the past few months have finished and the last one finishes in December this year.

I'm looking to find out what the best thing to do is.

I'm in a position to start overpaying and should I overpay to the interest only part, or the other parts, or change the whole of the mortgage product to one encompassed amount, balance the years and get the complete package on a repayment.

If the advice is to overpay how do I go about organising this?

Many thanks in advance.:D

rising_from_the_ashes

You'll need to look at each individual mortgage first - some allow multiple overpayments, some are limited to xx no / year, and some don't allow any.

If you're going to overpay (and they all let you do this) then start with the one with the highest interest rate and make the overpayments there.

It does seem a bit complicated and it may be worth looking at seeing if you can move all of these to one product - obviously you'd have to check you've no penalty fees etc on any of the mortgages, the length and interest rate of the new product etc.

smitchy73

Thanks rising, there are no penalties on any of the parts except we're limiting to over paying to I think 10%, the last one of the fixed rates ends at the end of December, and after that we're going to see them about moving it all on to one product, but know that if we don't we'll be fine.

So assuming we left it with one part of £30k on interest only and the other £55 on a repayment, would it be better to use the overpayments on the £30k part, we have thought about moving it all on to one repayment part as well and that takes the need away for an ISA etc to pay off the IO part.

getmore4less

Interest rates and terms of each part?


Check your T&C's for overpayment penalties. once out of promotional perios these are often unlimited.

smitchy73

two parts are definately on 3.5%(BoE Base +3%), one part is on fixed rate of 5.85% and ends in December, and the IO part I think is on about 2.5%, all have 26 years to go. Hence why we're looking to get it paid down earlier.

dimbo61

If you have spare money now IT might be a good idea to overpay the 5.85% fixed but that might change to 2.5/3.5% in december!
So overpay which ever has the highest rate first.
You dont give the amounts ? Part 1 is £25K at 3.5% Part 2 is £15K at 3.5% Part 3 is £15K on 5.85% ( now) but will be X% after Xmas. Part 4 is £30K at 2.5% Interest only.
Next question is do you need the security of a long term fix ? as you can get 3.39% fixed for 5 years from YBS ( fee £995) plus remortgage costs
Maybe a good idea to speak to a " WHOLE OF MARKET MORTGAGE BROKER"to discuss your needs !

smitchy73

dimbo61 wrote: »

If you have spare money now IT might be a good idea to overpay the 5.85% fixed but that might change to 2.5/3.5% in december!
So overpay which ever has the highest rate first.
You dont give the amounts ? Part 1 is £25K at 3.5% Part 2 is £15K at 3.5% Part 3 is £15K on 5.85% ( now) but will be X% after Xmas. Part 4 is £30K at 2.5% Interest only.
Next question is do you need the security of a long term fix ? as you can get 3.39% fixed for 5 years from YBS ( fee £995) plus remortgage costs
Maybe a good idea to speak to a " WHOLE OF MARKET MORTGAGE BROKER"to discuss your needs !

Yeah the 5.85% finishes in December and reverts to the base rate(3.5%) with my payment in January.
£18000 on 3.5%
£28500 on 3.5%
£30000(IO) on 2.5%(I think)
£25000 on 5.85% reduces to 3.5% in two payments time.

Don't know if we'd be able to get a decent deal anywhere as our LTV rate is about 83% at the moment.

Happy to stay where we are at the moment and overpay as much as we can afford, just need to know if we don't change anything is it best just to leave things as they are and pay extra to any of the seperate parts or overpay the IO part of the mortgage, or at the very most merge all into one lump sum, repayment and if we can overpay more we will.
Certainly if staying where we are, HBOS, don't want to and dont plan to pay an arrangement fee to pay a higher fixed rate, the last time I looked with our ltv, the nearest fixed rate was about 6/6.5% with a £999 fee, don't see the point in that unless rates were going to jump by about 4%
Certainly don't trust them to give me any decent advice but trust mse'ers to a certain degree,

dimbo61

Well with that LTV and the fact that you are on good rates for all 4 parts come 1-1-2012 I would overpay the highest interest rate first.
Start with the smallest one £18,000 and see how much you can knock off that each month.
Use all the money you are saving once the fix drops onto the SVR and try to round up !
£500 a month overpay would clear the £18K in less than 3 years

smitchy73

dimbo61 wrote: »

Well with that LTV and the fact that you are on good rates for all 4 parts come 1-1-2012 I would overpay the highest interest rate first.
Start with the smallest one £18,000 and see how much you can knock off that each month.
Use all the money you are saving once the fix drops onto the SVR and try to round up !
£500 a month overpay would clear the £18K in less than 3 years

Many thanks for that best advice i've had in ages.:D

handytips

Some good advice given already, however it is all based on interest rates staying low in the short to medium term, overpaying is great and will reduce the amount you owe quite quickly, the only caveat that i would give is this, if rates start to rise the banks will get greedy and start charging high application fees for fixed rates as people will panic, for your own peace of mind i would get a number of quotes for a full repayment mortgage. Like i have said many times always work your affordability on a rate of 6% and you wont go far wrong, now or in the future.