Switch to Repayment OR make regular Over-Payments?

Repromancer

I am happy to call the bank on Monday to increase me fixed payments above what the repayment amount will be - which was 795 last time i spoke to them 2 weeks ago. That way I am currently on "track" for the remaining 19 years.

Obviously any rate rises in the future will mean I will also need to raise the amount I pay to be on track. However by staying on fixed payments, the good thing is I will decide if I want to, if I can afford to, etc. And like VT82 said I might have a more expensvie loan for something else then (a car perhaps). So the Flexilibity is great!

Yes we are scared of interest rate rises in the future - but we have to deal with that when the time comes.

However this way I am still dictating what I pay. Down the line I might need e.g. a 6 month break (and only ask them to take out the interest element). By switching to repayment now I will lose all my rights to dictate what I pay.

So what I am affraid of? With the new regulations coming in effect from April 2014, will the Bank force me on repayment anyway? Which seems likely. And if so, will it be on some higher rate?

My aim is not to pay of the mortgage in 19 years time, as I will probably move somewhere else. My aim is to keep the bank happy for now, show them I am on track (ok increase to 800) without having to switch to repayment.

Thrugelmir

Repromancer wrote: »

So what I am affraid of? With the new regulations coming in effect from April 2014, will the Bank force me on repayment anyway? Which seems likely. And if so, will it be on some higher rate?

Lenders have been tightening down on criteria since the Northern Rock crisis of 2007. More so in the past 18 months. In fact lenders on the whole have been ahead of the regulator.

There's nothing to be afraid of in terms of the mortgage. What affects most borrowers is if one of the 3D's strikes, Death, Divorce or Distress (Financial). So depends on how much risk one is personally happy to live with and varies to each set of personal circumstances.

racing_blue

Thrugelmir wrote: »

There's only one instant access ISA that's higher than the mortgage rate, and that's a regular saver.

I guess it depends if you are the type of individual whose happy to pay a 1p per litre more for petrol, when there's a cheaper garage 50 yards done the road.

If my tank held 146,000 litres, I'd be driving the extra 50 yards for sure