5 year fixed at 5.99 due to end Sept 2014

Seker

Hello all,
I did not know where to post, but hoping someone can help.

Got a mortgage back in 2009. At the time a 5 year fixed seamed the best deal as not much LTV (£16k deposit). My question is, I have 4k and am saving each month to try to reduce my years (I now have 18yrs left). Am I better of paying the 4k off my remaining mortgage or waiting until next year when I will be ready to shop around (won't be locked in anymore on a fixed).

Hope someone can help.
Ruth

edinburgher

The net effect of overpaying is that you save interest by reducing the capital amount you have borrowed to buy your house.

So if you repay £4k, that's £4k of the mortgage balance where you won't have to pay 5.99% interest for the next year.

If anything, I'd say you're better off overpaying when you have a higher rate of interest than a lower one, as it will make a bigger difference.

Have you looked at whether or not you might be eligible for a better deal now and if so, whether or not early repayment charges apply?

Seker

Hello, Thank you for replying. I have done nothing yet. To be honest I never gave it a second thought and have just been taking some money as and when I could to save this 4k towards my mortgage. The house I am in needed a fair bit of work and the bulk of that is done now (took me almost 4 years to do up).

My lender is Natwest, where would I start. I feel like a fish out of water on this one.

Thank you

Seker

I don't know where to start really. I have my annual statement from Natwest and it say's that the 'early repayment charge' is £883.46 bringing my balance to £89,230.34. I thought once you fixed for 5yrs, that was that so to speak. Whatever I can do to help pay off sooner I will do.

This all daunts me. I have done a full clear up of all bills I pay any switched shopped around etc, saved £50 a month doing that, but had no idea it could be done with mortgage...

Anna_Glypta

Hi Seker

I have a natwest mortgage, also on a fixed term and I pay a 3% fee on any overpayments that I make. For me it is still cost effective to pay off chunks when I can and take the hit on the fees. By the time I am done overpaying I will still have saved over £21,000 so it's definitely worth it.

It is confusing when you start this, especially as from personal experience as when I tried to find out from the bank exactly what the costs were I seemed to get a different reply depending on who I spoke to. I kept pushing back by email so that I finally had a definitive answer in writing and there were no surprises.

Good luck. AG :-0

Seker

Thank you, I feel a bit better now. I know I have needed to tackle this and is something I am daunted by. I asked Natwest about setting up a standing order or something to pay off and they were useless, in the end I gave up and just put it in my savings which is why I have this 4k. My intentions were there.

Am I then best to talk to an advisor from Natwest as I still have a year left on this 5.99 fixed :-(

Some other good news, the 4k just went to 5k. A gift from a Great Aunt, I could splurge it, but I WANT this mortgage down. The monthly repayments are currently £663 (My choice as I took a bigger monthly hit initially and a 22yr mortgage).

I guess tackling it is the start and it can only get easier.

SG27

Am I reading this correctly that they charge a fee for all overpayments?

Is this true when you are on the standard variable rate too? If not I would wait until your current deal ends then pay the £4k once you have been put on the SVR and so save the fee. Then you can remortgage into a new deal.

If the fee is still on the SVR too then save the £4k until you remortgage and use a lender who allows overpayments many allow 10% without a fee. Then overpay the £4k utilising the 10% allowance.

Seker

Just got all my mortgage info out and mine say's I can make an yearly overpayment at 10% a year without a charge and set up repayments. Maybe Anna has a different type mortgage with Natwest.

Just calculated I'm managing to save an extra £150 a month too into my designated saving account, so feeling optimistic that I can make a real impact here:-)

Just need to know how to realise it and make a start...

Why do I feel excited? The last debt to tackle :-)

Anna_Glypta

I was not able to update my payments on a monthly basis (but that doesn't mean that you won't be able to). Just remember if you speak to advisor that they aren't in the job to save you money, they won't want to offer up any ways for you to save money but they can't say no if you want to overpay and are prepared to pay for the pleasure of doing so. The tricky bit is trying to work out exactly what that means to you in the middle of all the jargon.

When I have paid off lump sums the monthly repayment figure went down with no effect on the end date however I am now able to put the difference in my savings to pay for the next lump sum. I usually do a payment when I reach about £4k. My fixed runs out in 2016 but I am hoping to clear it by the end of this year - stupid me really for not finding this path before I fixed it in the first place. Hey ho, even though I have no intention of having a mortgage again I won't make the same mistake again if I do!

I'm sure you will be fine once you've got it all straight in your head and what a lovely Aunt. :-)

Best Wishes, AG.

PS. My second mortgage is the same as yours - I can make 2 overpayments on that without any charges but it's on a base rate tracker. And yes SG27 - I do pay each time I overpay and would not fall into that trap again!! GRRR :-)

SillySod

I got a NatWest mortgage about the same time as you. Check your contract for details about overpayments - I can overpay 10% of the balance per year without charges.

In my contract it is in the section "What happens if you want to make overpayments".

They will probably want to reduce your monthly payments but try to insist on reducing the term.

Seker

Hi all,
Thank you so much, things are beginning to make so much more sense now. I have had a look and it does state in the agreement section about overpayments and states ''a charge will be incurred on any overpayment the exceeds the annual 10% limit''. Now that I have my head round it a bit I guess it will do no harm going in and asking, but I need to be clear that it's years off my mortgage I'm after not lower monthly payments.

I think I have that, only took me all day!

Just made the mistake of reading how much interest I need to pay... yiykes - £61k over he term. NOW, that has motivated me, hands off!

So with the 5k and £150 extra a month surely it would make a good impact. And hopefully next year coming off this 5.99% will make a difference too depending what product I can get.

This site is great - FEELING MOTIVATED :-)