120% Mortgage Fix Rate Ending

smidgey

Hi all,

I just wanted advice my current situation. I took out a 120% mortgage in August 2007 with Birmingham Midshires. It's a fixed rate mortgage fixed at 6.45% and the fix ends on 01/09/2012 at which point the mortgage rate will reduce to 2.09% above the bank england base rate for life.

My monthly payments have been £647. I've never missed a payment and I've overpaid the the secured part by £53 a month for the last 18 months (rounds the total payment to £700). My mortgage term is 35 years - Will have 30 years left when the fix ends.

Start balances
Secured: £80,909
Unsecured: £25,747
Total: £106,656

Balances on my credit report
Secured: £77,223
Unsecured: £24,818
Total: £102,041

When the fixed rate ends I am going to continue to pay the £700 a month. Some rough calculations show it'll be around a £300 a month overpayment but to which part would people recommend paying this? The secured or the unsecured? Or an even split? I don't know which is the best thing to do.

I paid £86k for the house. I reckon realisticly it's currently worth £76k so am still in negative equity. This doesn't bother me, I'm not wanting to move anytime soon.

I can make unlimited overpayments once the fixed rate has ended, during the fix I was limited to 10%.

Also, the interest rate is currently looking good providing BOE base rate stays low?

I cannot tell you how excited I am to chuck as much money as possible to bringing these balances down. I am also saving £300 a month for a holiday in Florida next April. Once the holiday is over I can then look to put this money towards overpaying so potentially £600 a month overpayment.

Thanks for everyones advice in advance.

The_J

I agree with what you plan to do entirely.

smidgey

The_J wrote: »

I agree with what you plan to do entirely.

Thanks The J - Do you have any thought on which part to overpay? Part of me thinks the secured to bring the LTV down so I can get a better deal when interest rates go up but then with a near £25k loan it really wouldn't make that much difference.

koexelek

smidgey wrote: »

It's a fixed rate mortgage fixed at 6.45% and the fix ends on 01/09/2012 at which point the mortgage rate will reduce to 2.09% above the bank england base rate for life.

:beer:

You struck it lucky there.

I bet BM are kicking themselves:D

nmaria

Hi,

I would overpay towards the unsecured loan as it will be easier later on if you need to get another mortgage deal.

smidgey

koexelek wrote: »

:beer:

You struck it lucky there.

I bet BM are kicking themselves:D

I have to admit, I was thinking that! I just hope the BOE base rate stays low for a few more years

nmaria wrote: »

Hi,

I would overpay towards the unsecured loan as it will be easier later on if you need to get another mortgage deal.

Thanks! I've done a few more rough calculations.

I'll be paying roughly £145 a month off the secured when the new payments take effect so I will overpay this to by £55.

Then i'll be paying around £45 a month off the unsecured so I will overpay this by £255.

The secured will reduce by £200 a month and the unsecured by £300 a month. This way I can have the unsecured paid off in 6 years as opposed to 30. I know it's unlikely the BOE base rate will remain so low for this long but it gives me a goal to work towards! haha