Hesitant to make over payments?

danzx2

Hi,

I’m currently on a 5 year fixed rate interest only at 5.49% with Standard Life. This deal ends on the 24/01/12 and we go on to the SVR that’s currently 5.54%.

£141500 is outstanding and we purchased the house for £149000 in 03/07 95% at the time.

The current lender more than likely won’t have any fixed rate deals for us to move to and unless we can pay back 10% of the current market valuation we may be stuck on the SVR 5.54%.

I’m thinking of making over payments between now and January but keeping £1000 back for fees if we are lucky to move banks.

But for some reason I am hesitant to do this? I know its the best thing to do but just need some reassurance.

Thanks

Dan

Thrugelmir

danzx2 wrote: »

But for some reason I am hesitant to do this? I know its the best thing to do but just need some reassurance.

What reason?

danzx2

Thrugelmir wrote: »

What reason?

I don't know thats just it! I know its the best thing to do and will save me money in the long run.

I guess as I haven't paid anything towards my balance it feels odd.

Thrugelmir

danzx2 wrote: »

I don't know thats just it! I know its the best thing to do and will save me money in the long run.

I guess as I haven't paid anything towards my balance it feels odd.

Overpaying can become addictive. As gives a huge amount of satisfaction.

danzx2

Thrugelmir wrote: »

Overpaying can become addictive. As gives a huge amount of satisfaction.

I can see it becoming an addiction. Making overpayments is the only way I will have other options available. So I should just do it (as Nike quote)

Thanks for your time

CAN1976

As long as you

a) have buffer savings of x months outgoings in case of emergency

b) understand any fees involved with overpayments

c) can't get better than 5.49% on the money you have earmarked for overpayments

then it sounds Ok

danzx2

CAN1976 wrote: »

As long as you

a) have buffer savings of x months outgoings in case of emergency

b) understand any fees involved with overpayments

c) can't get better than 5.49% on the money you have earmarked for overpayments

then it sounds Ok

a) How many months would you suggest?

b) Yes, no fees up to £14,616 before Jan 24/01/12. After that no fees until early repayment, no maximum a year.

c) No


Thanks

CAN1976

That depends entirely on how risk averse you are. I have seen anything from 3 - 6 commonly suggested.

danzx2

Thanks for that.

Just another question.

If I went to my bank and wanted to get a 90% deal with them as a remortgage what would happen if the valuation/LTV wasn't 90% would they charge me? Would it affect my credit rating?

I have a local estate agent coming on Friday to value my house.

Thrugelmir

danzx2 wrote: »

If I went to my bank and wanted to get a 90% deal with them as a remortgage what would happen if the valuation/LTV wasn't 90%

The valuation would need to meet the LTV criteria for the product you are applying for.

So overpaying as much as you can afford for a period of time will pay dividends in the longer term.

RenovationMan

danzx2 wrote: »

Thanks for that.

Just another question.

If I went to my bank and wanted to get a 90% deal with them as a remortgage what would happen if the valuation/LTV wasn't 90% would they charge me? Would it affect my credit rating?

I have a local estate agent coming on Friday to value my house.

Are you on a high LTV with your mortgage (i.e. do you not have much equity in your house?). Overpayments are a great way of increasing your equity (and therefore lowering your mortgage debt) and lowering your LTV. With a low LTV (i.e. 75% or less) you will have a wider range fo mortgages to choose from and will be able to get better mortgage rates.

I'm currently working to reduce my LTV to 50% (i.e. I own 50% of the house and so does the bank). as part of a challenge on the Mortgage Free Wannabe board. If you are keen on overpaying then that's a good place to start.

If you can move from standard life, then I would do as they are appalling! I speak from bitter experience. They sold their mortgage book on to another bank (Barclays?).

If you are having an estate agent over to value your house to give you an idea of its value for a mortgage company then I would take their valuation as a rough guideline and not gospel. If you are considering selling the house then make sure you don't have a rememption clause in place with either Standard Life or any other mortgage company you decide to go with.