overpay before mortgage renewal

srobbo74

Unsure of what to do!

Current mortgage due to expire May, paying £500.24 a month on £90,000 mortgage at 5.29% plus the base rate recently had the house valued at between £110 and £115k.

Is it worth me paying off between 5 and 7k in a one off payment to lower LTV for new mortgage deal

Thrugelmir

If you can afford to. Overpaying the mortgage makes sense. As you won't be earning this rate of interest on your savings.

A lower LTV helps obtain better interest rates until around 60% is reached. After that rates tend to plateau.

srobbo74

yes can afford to had lent this money to family and just had it back currently just sitting in a normal account so doing nothing for me think i might contact abbey to arrange

catieeb06

srobbo74 wrote: »

Unsure of what to do!

Current mortgage due to expire May, paying £500.24 a month on £90,000 mortgage at 5.29% plus the base rate recently had the house valued at between £110 and £115k.

Is it worth me paying off between 5 and 7k in a one off payment to lower LTV for new mortgage deal

In fairness it will lower the amount that you pay in interest over the lifetime of the mortgage (assuming you don't borrow anything else and pay on time each month etc) however, assuming that you move away from Santander- this will be of benefit, if, however you do stay with Santander their rate ranges have recently changed to 90%, 85%, 75% and 60% so by being devils advocate and taking the £110,000 as the conservative valuation and you paying your mortgage down to £5,000- again I know you have £7,000 but you might find you want a "buffer zone" this will bring your LTV down to 77% LTV.

Just a word of caution in case you are looking to stay with Santander.

srobbo74

thank you. i do also have another couple of thousand buffer so if i was to pay 7k that would leave me with a 75%ltv

Thrugelmir

By reducing the mortgage balance and maintaining your repayments at the current level. The sooner you'll comfortably reach your target.

getmore4less

followon rate?


over paying early(now) only saves you a bit of interest, if you wait you can optimise the payment to match LTV. doing it now is just a guess.