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poppasmurf_bewdley

Delete33 wrote: »

Hi all, things have moved on since I last posted. I now have a F/T job, CC cards are all cut up and binned, Crap1 paid off £4000, Barclaycard owe £7000 and Interest is frozen, paying at least £100 month to clear this debt. I have a rainy day fund of £1000 in a three year fixed rate savings account. Feel a lot more positive than a few months ago, thank you to all who have given advice to me.

Hopefully, you don't have this with Barclays, or any of their associate companies, as they could offset this against what you owe them.

Delete33

My rainy day fund is with Metro Bank, on line only, can not access for 3 years. I am happy with this.

Delete33

Hi all, reading hundreds of posts on this site has given me valuable information, thank you all. My only worry is my mortgage, I have been making over payments and the balance when I checked on noodle was £74,000 it has gone down £3000 since last year. I am on an interest only Mortgage paying £157 per month on the 1st. I have 6 years to go, what do you think I should be over paying monthly to get the debt down to a small amount or any advice regarding this would be gratefully received.

Sanctioned_Parts_List

My understanding of interest-only mortgages is that the mortgage lender lends you the cash to buy the house, and you pay the monthly interest, but none of the principal. At the end of the term, you are required to pay them back the entire principal stake (i.e. the cost of your house) in one hit. There's no point in making overpayments as you never pay down the principal.

I might be wrong though, in which case someone will be along to correct me.

In the bad old days, these were mis-sold to kids out of school as a way of "getting on the housing ladder cheaply," hoping that you'd have sold, remortgaged or whatever to get the mortgage broker off the hook before the chickens came home to roost.

What you should've been doing is paying £hundreds into funds, stocks, investment trusts or whatever over the mortgage period, hoping to make the principal back through other savings.

If you haven't been doing this and don't have £74k to pay the mortgage back, your options are either to remortgage (this time remembering to go for a repayment mortgage), or sell.

Can you save enough in 6 years to get a suitable deposit under the new mortgage rules to buy the house with a repayment mortgage?

Delete33

The overpayments do come off the total debt but only in £1000 segments, this means that the interest will also be less over time. I believe I have an option of extending the time frame to pay off the debt although this will increase the amount of interest. I am 56 in May so that is why I am worried. I pay extra every month since I regained F/T Employment, at least £150. Thank you for your reply SPL.

sourcrates

Delete33 wrote: »

Hi all, reading hundreds of posts on this site has given me valuable information, thank you all. My only worry is my mortgage, I have been making over payments and the balance when I checked on noodle was £74,000 it has gone down £3000 since last year. I am on an interest only Mortgage paying £157 per month on the 1st. I have 6 years to go, what do you think I should be over paying monthly to get the debt down to a small amount or any advice regarding this would be gratefully received.

Hi,

Err, in reality, nothing has gone down, your only paying the interest, at some point, when the mortgage term ends, as said before, the principal sum you borrowed will need to be repaid in a lump sum.

You should really switch to a re-payment mortgage as soon as you can, unless of course you have the funds stashed away somewere to repay it ?

Delete33

Hi Sourcrates, If I can switch to a re-payment mortgage what do you think the Monthly payment is likely to be. As I have previously said I pay £157 per month and at least £150 over payment.

sourcrates

Delete33 wrote: »

Hi Sourcrates, If I can switch to a re-payment mortgage what do you think the Monthly payment is likely to be. As I have previously said I pay £157 per month and at least £150 over payment.

Well I'm not a mortgage advisor so I really couldn't tell you.

But there is a mortgage board on the forum, maybe you should post your question on there ?

http://forums.moneysavingexpert.com/forumdisplay.php?f=15

Delete33

Thanks for pointing me in the right direction sourcrates, much appreciated.