Mortgage Free in Three Yrs

esthomizzy

esthomizzy wrote: »

Does anyone have an opinion on this?

I wasn't meaning to hijack the thread I am of course participating in mf in 3 but obviously my target was not mortgage free exactly but a significant reduction to be sure

and the reason for posting here instead of elsewhere is that I think the rest of our motivated mf in 3 crowd are the most likely to be knowledgeable on the subject.

ailuro2

tbh, esthomizzy, that's just too much information in one go for my little brain to make sense of it all - will have to think about it.

follow the Golden Rules -

always pay off the highest interest rate debt first, unless you're close to getting rid of your debt in which case you would keep hold of your ISAs and take the hit.

shop around for the best deal, but always phone up your current lender, tell them you're thinking about leaving and ask what deals they can offer you.

http://new.egg.com/visitor/0,2388,3_54988--View_1028,00.html use the Egg calculator to work out how quickly you can pay off your mortgage by overpaying.

make sure you would be offered the mortgage in the first place before you get your hopes up on a better deal - there isn't limitless lending out there any longer, banks are being much more cautious than previously.

hope this helps.

ailuro2

In simple terms, you'll be saving the difference in mortgage rates for a period of three years - so, a difference of 1.64% times three, = total over three years 4.92%, on an average balance of 203,500 (215-192, year three outstanding balance)

so £10,012 to be gained

It will cost you £8064 to get into the new rate mortgage

So, a saving of £1948 over the three years.

But - and it's a big but
have you considered that taking out a 223K mortgage instead of 215 will cost an additional 1200 in interest payments over a 20 year period, even at 4.15%

If it were me, I'd definitely phone up FD and ask them what they could do for me!:p because really it seems like a bit of work for not that significant a gain currently. Where do you think the mortgage market will go in a few months - do you think deals will improve as more money comes into the market???

However - I definitely agree those savings should be in the mortgage saving you interest instead of idling in the ISAs - around £450 a year it is costing you ast the moment.

firesidemaid

i too am trying to get my head round those sums, eso.

my first thought too, was 'that's way too much bother' - but i do see that you will still be saving money, it just seems a shame to have to use all your savings to pay the get-out, it sounds wrong.

some simple thoughts i have had are.....what is your LTV? will you definitely get the mortgage you want considering how the lending market has changed since you last took out your mortgage?

how much would you take a risk ie. there are some really low tracker rates available for the same fees eg. FD, HSBC etc, which could save you more...

another thought is that over the next year the difference in interest between the 2 rates is approx. £3526, but if you leave moving until the 2% erc, then it would cost you less than £4000 ie. £2400 less than the 3% this year.

ie. you could keep your savings or pay them off the mortgage and still actually be only £1k or so worse off. have i got that right (i think i know what i am trying to say):rolleyes:.

re. renting your room out - that's £9k a year to pay off your mortgage......

good luck with whatever you decide x

ps. i'm off again to spend ages on the phone to sort out the playground fight between my two lenders:mad:

ailuro2

firesidemaid wrote: »

i
another thought is that over the next year the difference in interest between the 2 rates is approx. £3526, but if you leave moving until the 2% erc, then it would cost you less than £4000 ie. £2400 less than the 3% this year.

fsm - I think that's a great suggestion, it really ups the gain available from moving mortgages.:D

If only we could have crystal balls...or maybe titanium ones in this current climate would be more appropriate, to hang off for a better deal.:p

Desperate_Housewife_2-2

I've made a mistake in my calculations and having gone over the figures realised I'd miscalculated £500 so I've updated my sig and my balance is not £10500 but £11K :mad:

It's the flippin' Alliance and Leicester savings account that b*ggered it all up, never was much good at maths so I am now going backwards!

Never mind, best to come clean and start over, still not too bad really and my virgin one account shows a credit due to the A&L saved up money going in too so at least I am earning a whopping 0.1% (before tax) on anything in credit, better than paying 3.9% on the amount owed.

Keep up the good work everyone

Trying_to_be_good

Desperate_Housewife wrote: »

I've made a mistake in my calculations and having gone over the figures realised I'd miscalculated £500 so I've updated my sig and my balance is not £10500 but £11K :mad:

Don't be hard on yourself, Desperate Housewife, it's still brilliant progress!

firesidemaid

it's been deja vu re: our mortgage situation today!

i have rung each lender twice in turn exactly as i did last saturday - and again each one is blaming the other, althought i think i am getting a clearer picture now:rolleyes:. and, i think existing lender is being really petty and trying to delay giving up the mortgage.

so, i have now had to ring up for my own redemption statement that i will have to then fax to the new lender (because the old lender won't give them one unless they do a), b) and c. once the new lender does a), b) and c) then then they won't give them one until they then do d), e) and f) etc etc).

meanwhile, i somehow missed the base rate reduction this week:o, which is fab news once we can start our new mortgage............

ailuro2

firesidemaid - I bet they weren't this obstructive when they were lending you the money..:mad:

firesidemaid

:rolleyes: actually, funny you should say that.....

they have always lent me the money, but they have ALWAYS got it badly wrong, normally resulting in us getting compensation out of them.

my very first mortgage they took the money out of my current account leaving me 30k overdrawn one weekend:eek:, they gave me half my arrangement fee back.

then i claimed for mis-selling of the endowment (and won). whilst trying to change to a repayment mortgage then, we realised they had been charging me the wrong interest rate for 5 years (in my favour):D.

the mortgage before this one they couldn't get it together (fortunately they charged us for a basic valuation instead of the full bulding survey, accidentally;)) - and then they sent us wine to say sorry for everything to the wrong address! ie. they forgot we'd just taken a mortgage out, and had bought a new house!

because it went so wrong then i tried to make it really easy for them the next time, i wrote a letter detailing please do this and don't do that - of course they ignored it all and mucked up again. this time we asked for the full arrangement fee back. they would only give half and would not relent. that is when i moved my current account and then knew we would always move the mortgage at the end of the fixed term!