Mortgage Question

itian

Hello Everyone,

Great forums guys, I normally have a read up on here for advice and its great!

I have my own question now.

I and my partner brought our property in 2008 just before everything went belly up so we were very lucky everything was done and sorted before it happened!

My question is me and my partner have a 100% mortgage, we came to the end of our fixed deal last year and went onto the Standard Variable Rate and it reduced are mortgage by about £400, what we thought we would do is overpay by £400 which we have been doing for almost 8 months I think.

We do plan to look around for a house in about 2\3 years to move up the property ladder but im really confused to how we can do this as we have a 100% mortgage, we don’t have any saving, we both have good jobs and combined income (before tax) is about 70k.

Do we keep on over paying on our mortgage or put that £400 each month in savings? Confused!

Any advice would be great!

BoGoF

Some questions

1) Amount of mortgage outstanding
2) Valuation of property (realistic selling price)
3) What is your current SVR

tam2oo5

My concern is that because you bought before things went belly up and you have a 100% mortgage is that you ultimately went straight into negative equity. Do you know how much your house is worth now compared to what you paid?

If you keep overpaying atleast its taking the equity down, if you put it in a saving acc you need to make sure that the interest is obviously more beneficial for you guys vs the interest rapaid. I probably would overpay into the mortgage...

itian

Answers

1) Amount of mortgage outstanding - I would have to check, dont know off the top of my head.
2) Valuation of property (realistic selling price) - we brought it for £167.950 in 2008, dont know now
3) What is your current SVR- its about 5%

opinions4u

You need to have the funds, from sale proceeds and saving to repay the mortgage, including estate agents fees and legal costs.

You need to have a deposit (typically 10%+) for the new house. As well as legal fees, valuation fee and product fee.

So keep overpaying / saving to have any chance.

BoGoF

After reading your first post again, you earn a combined £70k but have no deposit and are only overpaying £400 a month. You either live a rather extravagant life or have lots of other debts?

Where does it all go?

itian

BoGoF - extravagant life, no not that I know of :-s

I thought overpaying by £400 was good! - confused by your post?

BoGoF

My point was that on £70k a year and not leading an extravagant lifestyle I would have thought you would have had more than £400 a month spare - but then again I have no idea what it's like to have £70k a year between 2 people.....or are there kids ?

itian

We have 1 car finance and 1 loan - nothing major, are you saying we should be paying more.

We do have a credit card but its never been used!

No kids.........yet!

BoGoF

If you have the cash to spare then pay more/save more. Just when you said you had no savings but were overpaying £400 per month that implied that took care of your monthly income.

Don't get me wrong, overpaying £400 per month is a good thing but if you want to open up the best mortgage rates you need either more equity to use as a deposit or have saved up more of a deposit.

opinions4u

What's your take home pay? £4k a month?

Where does it all go?