trying to get prepared - any help!

hypno06

Hi all, I don't often pop over here, mainly because my unsecured debt is what is more pressing at the moment, and as you can see from the signature is coming down nicely.

However, what has prompted me this morning is that I have had my annual mortgage statement and I wonder if you could give me some help please?

I took out a 25 year mortgage 4 years ago (this is the end of 4th year statement) at a lovely fixed rate of 4.99% for 10 years. So I have 6 years left to run. Thing is, it is interest only. Had to be really, to allow us to repay the unsecured, unfriendly debt as quickly as possible.

My debt free date for the unsecured debt is March 2010, which means that with 3 years of the fixed rate left, I can start paying off the capital, finally.

I currently pay just over £1400 a month on the unsecured debts, although this really puts the pressure on. The mortgage interest only payments are currently £730 per month.

I believe that the terms of the mortgage are that no more than 10% of the capital can be paid in any one year without incurring early redemption penalties.

Could someone with more brain than me, help me work out what I am going to need to pay in capital repayments starting in 3 years time. I could probably pay £1000 a month extra, on top of the interest as it stands now, as this will leave me a bit of leeway to account for the inevitable interest rate increase that I will face in 6 years time.

Hope this is not too cheeky - my brain should be able to get round this, but it can't and I am just having a "get real" moment - don't want to have a huge shock to the system either in 3 years when I have the funds available, or in 6 years when the rate changes.

Any help, pointers, or ideas will be gratefully received! Many thanks.

getmore4less

Is the answer not upto 10% of the size of the loan.

interest £730pm @ 4.99% = loan of £175k so £17.5k max overpayment which is £1462pm, roughly the size of your cuurent debt payment, the £1kpm plan is well within this

Don't forget to put the mortgage into your snowball calc so you don't overpay any debts that are below the mortgage rate.

If you leave the mortgage as is and then go to repayment when the current fixed trate runs out at say 6% over the remaining 15years the repayment will be under £1500pm. overpay by £1kpm for 3 years and you will be looking at around £1100pm when the fixed rate changes for the repayment over 15y.

hypno06

Thank you - I had not thought about adding it into the snowball calculator - had always thought of it as a seperate entity to the other debts.

However, as my biggest debt is a loan at 3.83% it would make sense to look at it all together as some of my overpayments should go to the mortgage before the loan is paid off as the interest rate is higher on the mortgage than the loan.

Thank you for your help - told you my brain should be able to deal with it!!!

Off to fiddle with snowballs......:D