advice on morgage please

karren

Hi wonder if you can help in anyway, have had yet another letter to say that the morgage has gone up again have £64,000 left over 17 years, have £1,000 rainy day money combined income of £28,000 and 2 small children and eager to get rid of the morgage but how? do i swap to 10 year or 5 year fixed rate and over pay? or plod on and and pay the bank what they ask evry month? I really need support as i want to enjoy kids but also have a secure safe future too? thanks

Dithering_Dad

Why not work out how much extra you can afford to reasonably overpay on the mortgage each month, work out how many years this will allow you to pay your mortgage by and then get a fixed rate deal until this date.

i.e. if you can afford £300 extra a month, put this amount into one of the many overpayment calculators available, and if it says you'll pay your mortgage off in 12 years, then try and get a 12 year fixed rate mortgage for that time.

If your overpayments will vary month by month (i.e. some months you can overpay £300 and some nothing at all) then see if you can find a better mortgage deal that allows these random overpayments.

karren

have swapped to a fixed rate over 5 years and the same intrest but fixed and am going to put every spare penny away to make a payment every year off the morgage and then when i swap to the next morgage in 5 years will shave off another few years as i havedone this year! wish me luck I hope the plan works, heres to a happy retirement that little bit earlier!

jamesd

It's really the time to be looking long term. Today that means appreciating that we're in what is probably a temporary period of rising interest rates that are likely to start falling again in a year or two. Fixing for five or ten years at half a percent over current rates isn't likely to be good long term, since it's likely to be fixing at the highest rate and locking in that higher rate when rates fall. Fixing for a couple of years might be useful to provide a certain cap on how much you'll have to pay.

For the short term this means things like going interest only, taking a repayment holiday or whatever else is needed to be reasonably comfortable with the mortgage payments, which look likely to rise by at least half a percent over this year. Better to act now than later, so you still have a cash reserve if they rise above the level you can handle for a year or so, then you still have the savings to cover the difference.

For the long term, investments are likely to return more than the interest rate on the mortgage, so investing in a stocks and shares ISA is likely to get you to a paid off mortgage faster than overpaying.

If your mortgage interest rate is below the best cash ISA rate, saving in the cash ISA is also better than overpaying on the mortgage, but not as much better as investing.

Posters in this section tend to concentrate on overpaying as the way to repay the mortgage. It's roughly the least efficient way possible to do it but it is predictable.

What is your current mortgage interest rate? What's the current property value and equity value? Worth a check to see if you can get a better mortgage deal, whether that's fixed or variable. For any new mortgage deal it's worth starting out interest only and making extra payments up to the repayment level. Then you can reduce them towards the interest only level for a while without having to beg the mortgage lender to let you.