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Help Me

Ok, I've finally made it to this board after being a DFW.

That's done, now I want to be a MFW!

My situation:

I have a £109,450 mortgage. It's a five year fixed term that is due to end on the 31st January 2014. I changed to Lloyds in Dec 2011 after I was with Halifax and paying £798 a month. This is my first mortgage.

I now currently pay £475.36 a month. I have asked that I make an additional payment of £50. According to this website, if I do this it will shave 7 years off off my 35 year and 5 month mortgage.

Interest rate is 3.89%. My aim is to be mortgage free by the time I am 40. I am 29 and my current house is valued at £159k.

Any thoughts suggestions, especially regarding looking at new mortgages in the next few months? Fixed versus tracker (I like to budget)? Additional payments? Can it be done?

Replies

  • Sounds good so far.

    When I was thinking about fixing for a mortgage, I had a look to see what amount I needed to get to to get down to a better LTV, and how long that was going to take. To get down to a LTV that would make a big difference in the rates was going to take us over 3/4 years, so in the end we thought that it would be best to fix now, then we have security and can budget, then once fix is finished we can reevaluate at a low LTV.

    On our fixed rate, we can have OPs of up to 10% per year.

    HTH!
  • Welcome to the MFW board...

    I have had a variety of mortgages over the years, from fixed to cash back (do they even do these now!), to tracker.

    I am currently on a 5 year fixed rate, interest is fairly high (5.09% on the main portion of the mortgage, 2.5% on the two advances I have) because this was taken out over 4 years ago (ends early March 2014). But it is also an Offset mortgage and I am a huge fan of these products. You tend to pay a little more in interest for the flexibility and visibility you get with these mortgages although they are much more affordable now than they were 4 years ago.

    The general rule of thumb is you should offset around 20% of your mortgage balance in savings to make it financially worthwhile. There have been times we have fallen well below this though but the benefits for me have always been worth it. :T

    I don't think I could be tempted away from an offset mortgage to any other mortgage product, so this will certainly narrow down any future mortgage search for me:D

    It's worth a look if you have some savings to offset and can hold cash in your current account during the month (easily done by arranging to move your direct debits to the end of the month so wages offset the mortgage for as long as possible).
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