Does this make financial sense?!

spitandpolish

Current mortgage is £119,207 looking to pay 10% without penalty to £107,286. It is interest only @ 5.09% 7 years remaining of a 10 year fix.

Would I be an imbecile to pay the 6% penalty on the balance and remortgage to capital repayment over 15 years.

Current LTV is 75% could reduce this to 60% with savings.

Considering 5 year fix at 2.99% or 10 year at 3.99%

I'm figuring what I lose on the swings I make up on the roundabouts.

Your thoughts please.

Thrugelmir

Can you overpay by 10% a year?

spitandpolish

Thrugelmir wrote: »

Can you overpay by 10% a year?

Yes.

Jan-Dec

Thrugelmir

Then overpaying may be a better option than incurring a 6% penalty.

Until the balance is reduced further.

dimbo61

Use "whatthecost" and put in the figures you have and see how much you would save !
Now I would check with the mortgage centre of your lender and pay off 10% now ( if allowed without ERC)
While on the phone ask if you can reduce the term!! ( we paid £50 )
Use your savings to make up the bigger payment each month
ONLY MY VIEWS

ch3101

If you overpay by 10% each year until the end of the fixed period then I assume that you'll have reduced it to £86901.90.

I assume that the overpayment limit would end here and you could just pay off all that you have saved up?

Remember that your monthly payments will reduce due to overpayment as well.

spitandpolish

Thanks guys... useful calculator too.

OK so I'll plan on over paying 10% for the next 7 years instead, should get the balance down to ~£57k. I/O was ideal as our household income is mostly commission based and we prefer/ed the flexibility. I think we'll go capital repayment when we come to remortgage.