Help and advice on current situation.

vwcr

Hi all im looking for some help and advice please. My current mortgage on my home is an intrest only mortgage, at the time of taking the mortgage this was the only way i could do things to keep the repayments in my budget. This was fixed for three years which ended 14 months ago and since then the repayments dropped to the base rate and so that allowed me to overpay every month.

I m currently overpaying still as i didnt want to apply for a new repayment mortgage as for the first few years of a new deal i will be paying the interest.

My problem is now i recieved a letter yesterday saying the base rate is chaging and going up from 3.55% to 3.99% and so my repayments will be going up as from april. Im unsure if keeping this and overpaying is now the best method and if not how do i go about seeking advice on the right mortgage for me.


If anyone can advise me i would really appreciate it.

Thankyou.

Dave_Ham

There are many variables here, I will list some that jump into my head now:

Loan to value - by that I mean your current mortgage as a % of property value - this is key
Circumstances - has your income, employment or credit rating changed?
Future - what do you consider will happen - bigger family, move, relocate etc.

Always ask your current lender whether they have any retention products you can go onto - this will save credit score and underwriting and then once received look across the market and see if there are better deals.

Cannot give any more detailed information, without knowing more about some of the considerations above..

originalmiscellany

The cynic in me would say how were you planning to pay the mortgage off if you are only able to pay it at interest only at 3.55% and a .4% increase is going to make it tricky?

I would say you keep on overpaying as much as you can, knowing that every penny you clear of capital will make a difference in the long term - and if you are only just into your mortgage (I think you've intimated you are) then it really is the best time to pay.

All the best

RenovationMan

vwcr wrote: »

Hi all im looking for some help and advice please. My current mortgage on my home is an intrest only mortgage, at the time of taking the mortgage this was the only way i could do things to keep the repayments in my budget. This was fixed for three years which ended 14 months ago and since then the repayments dropped to the base rate and so that allowed me to overpay every month.

I m currently overpaying still as i didnt want to apply for a new repayment mortgage as for the first few years of a new deal i will be paying the interest.

My problem is now i recieved a letter yesterday saying the base rate is chaging and going up from 3.55% to 3.99% and so my repayments will be going up as from april. Im unsure if keeping this and overpaying is now the best method and if not how do i go about seeking advice on the right mortgage for me.


If anyone can advise me i would really appreciate it.

Thankyou.

You need to google some mortgage products to see if you can beat your current rate. If you can't then you're going to have to continue to overpay your mortgage until you have sufficient equity to move onto a better deal.

I'd just advise you to make your mortgage overpayments your number one financial priority until you have reached a Loan to Value (LTV) of at least 25% - this is where you own 25% of the house and the mortgage company owns 75%. You'll then have a better range of mortgage products available to you.

vwcr

RenovationMan wrote: »

You need to google some mortgage products to see if you can beat your current rate. If you can't then you're going to have to continue to overpay your mortgage until you have sufficient equity to move onto a better deal.

I'd just advise you to make your mortgage overpayments your number one financial priority until you have reached a Loan to Value (LTV) of at least 25% - this is where you own 25% of the house and the mortgage company owns 75%. You'll then have a better range of mortgage products available to you.

Thanks for the fast responses, my home i used to jointly own with a family member but they moved on and i ended up buying them out over 3 years ago. This intrest only mortgage was to get me through untill rates changed and repayments came down. I own about 22% of the property so maybe there is a better deal to be had.

getmore4less

vwcr wrote: »

I m currently overpaying still as i didnt want to apply for a new repayment mortgage as for the first few years of a new deal i will be paying the interest.

Mortgages do not front load interest.

RenovationMan

getmore4less wrote: »

Mortgages do not front load interest.

You do pay more interest in the early years of a mortgage than the latter years though, but this is just because the mortgage loan is larger at the start than at the end.

I guess this is what the OP is referring to, but unless he actually starts making payments off the loan balance then his interest payments wll never go down.