Clearing Mortgage advise needed

markvirgo

Hi
Figures are not exact, I have used the overpayment calculator to get the idea.
I understand that rates can go up and down.
I have a 3 part mortgage with Nationwide with 8.5 years left on all.
I can overpay by £500 max per month on any part and it will drop the interest paid as long as it's in the £500 bulk payment, all other over payments wouldn't affect the interest until after the 5 years has ended.

Part 1 (the main mortgage) is interest only at £60000 and is above track at this time by £10000 as we always paid more in then needed. Rate just changed to 2.99 on 5 years fixed

Part 2 Repayment £40000 Rate just changed to 2.99 on 5 years fixed


Part 3 Repayment £26000 Rate not changeable for 4 more months 6.08

Question is regarding my plan to pay off quicker.

Plan A is with the monthly saving of £250 approx since changing to the new lower rate of 2.99 ( was 5.95) I was planing to overpay part 3 by £500 every 2 months to end this part 3 years earlier.
I would then use this money to overpay part 2 which would finish that in 2 more years.
I would then use the money to either overpay part 1 to build up some endowment surplus or change some to repayment and pay that off.

What do you think of my plan and is this a good way to go?.

If I go down this route should I fix part 3 for 5 years at 2.99% or leave it a BMR at 2.50% which is likely to go up at the end of 2013.

Dave_the_Ginger_Cat

Based on these figures, it looks a sensible plan, yes.

And as to to fix or to leave - it depends on your attitude to risk. Are you happy to take a short term saving for what might be a longer term increase. 5 years looks a good term to fix though, and rates may start increasing

markvirgo

Thanks Dave

amnblog

Ask Nationwide to advise you on this. Get it in writing, they you have something to come back with if they get it wrong.