Is it as simple as that...?

ryanryan

Hi my first thread...!

Amazing advice and support just from reading threads..

I have had a mortgage with Natwest for 5 years, 30 to run, I am now on a base tracker, my mortgage value is around £91,000 my monthly payments based on 4.0% are around £430.00 I have agreed to OP £150.00 per month (and have made 3 payments so far), my understanding is that this will wipe 11 years off my mortgage and save me £27,822 in interest :beer:

Its just a one bed flat, which I intend to keep for the next 30-40 years to rent out and eventually sell (Pension!)

Is it as simple as that?

I have asked Natwest to confirm that my interest is calculated daily - Which it is, my payment and OP is made on the 25th of the month (When I get paid, does that matter, should it be on the 1st?), should I get confirmation of daily interest in writting, or is verbal ok?

What would happen if I have go to a fixed rate, or change the account. I will have difficulty changing mortgage providers as this was 100% mortgage (when times were good and lenders were throwing money at people) so I have little equity in the property - AT THE MOMENT!!!

Thanks again!

ryanryan

Sorry... based on current overpayment the flat will be paid off in full in 18 yrs. Current mortgage £91,000 worth £100,000

financialbliss

Ryan, if you interest is actually charged daily, then the sooner you can repay, then the sooner you will see the benefit.

When I was overpaying to the mortgage, I made my overpayments on the first of the month.

Good one for making the overpayments.

FB.

ryanryan

Thanks - But even keeping it as it is, is good right?

originalmiscellany

Yes very good. As you noticed, if you overpay and save a fortune in interest - I view it as saving now, and it means long term your future will be a lot more rosy... If you can pay monthly that's great, I pay as and when, a few bits here and there as i like the feeling of constantly overpaying my mortgage down! But yes, anything to shorten your mortgage by 11 years is to be praised!

ryanryan

Thanks.. Just worried that paying on the 25th of the month instead of the 1st will effect this..
Im guessing it wont, much!

dimbo61

You are right as it will make very little difference if you pay on the first or 25th !!
Keep up the overpayments and build up your equity in the property

Sepa74

Yes, it really is that simple... and by making your overpayments, you'll find that if you do need to remortgage for whatever reason, you will have more equity, making it easier to find a better deal.

But do make sure that you have 3 - 6 months worth of outgoings in an emergency fund in case you lose your job or something... throwing absolutely all your spare cash at the mortgage can backfire if life gets in the way!

getmore4less

Do you currently live there?

If you do and if the plan is to rent it out you need a deposit for the next place.

ryanryan

Yes thank Sepa... Thats covered.

Yes currently live here, but have a healthy ish deposit in the bank for next property, which I want to get in the next few years.

My plan is to pay this off ASAP, whilst renting it out, then sell when im 50-60 (Im 31 now). I know I will pay tax on the income for rent, but I dont have a pension, so want this to be that when I am older + any other savings / investments I make along the way.

Engeroosi

remember capital gains tax!!! I have a flat which I rent out also, I am always wary of what the taxman is going to swipe from any profits!!!