Some advice needed

wayne25

Hello all, this is my first post so be gentle with me please.

My fixed rate deal with Barclays has ended and I have gone on to thier 6.3% Tracker with an outstanding mortgage of £25849.

I also borrowed £10000 extra on a fixed rate 2 years ago which ends in November which will also go on to the same 6.3% Tracker, as of today I owe £9453 + £25849 = £35302. I have 16 years and 3 months left on the total amount.

I am looking at ways to make savings and would like some advice on what I am thinking of doing, here goes.

If I borrow £9000 over 10 years at 6.6% it would be £101.70 a month with a total payable amount of £12204. £3204 interest.

If I paid of £9000 of the £25849 motgage it would give me a balance of £16849 reducing my total amount payable from £41593 to £27111.
A saving there I think of £14482 + £3204 loan interest on top = £11278.

I would still have the smaller mortgage, which as it stands is going to cost £15077 total, but If I paid that of instead I think I would save less in interest payments as that is the smaller amount.

It looks to simple and easy so I think it can't be right.

I would be paying about £30 a month more this way but at least I know the loan rate would not change and could maybe over pay on the mortgage some months.

Is it worth doing and are there any pitfalls in this.

Any advice would be welcomed.

Thanks

Wayne.

luckyfool

Why not overpay your current mortgage to the tracker portion until November, then switch the whole lot onto another more competitive rate wiht Woolwich or another lender?

wayne25

You,ve lost me there luckyfool,.

wayne25

What I am asking, is it worth borrowing £9000 to pay it of my mortgage.

Wayne.

luckyfool

But your borrowing the 9k on an unsecured loan at a higher interest rate to pay off your mortgage. I'm not seeing why you would do that? If you want to pay less interest by paying it off faster then you can just overpay your Woolwich mortgage (check your terms but normally you can overpay 10% per annum at least) and as the rate is lower you will be better off. Your penalty on the fixed rate ends in November so you could move the whole mortgage onto a new "fixed rate" then and also amend the term if suitable.

wayne25

Yes the rate is higher on the £9000 loan by 0.3%, but 6 years and 3 months less than my mortgage.

I pay about £2350 interest on the loan and reduce the total end of term amount on the £25849 part of my mortgage from £41593 to £27111.

Also with interest rates set to rise the £9000 would be at the same rate from the life of the loan.

I am by no way saying this right, I was just testing the water so to speak.

If I want to move my motgage to a fixed rate with Barclays there are fees to pay as there are with other lenders, or a higher interest rate with no fee's.

I am just a ordinary working bloke trying to get his head round the clompexity of motgages and finance.

When there was two incomes in my houeshold it did not matter so much, but with a second child on the way and one income things are getting tight.

wayne25

Lots of nice advice here then..