Mortgage advice please 24 September 2007 at 5:35PM in Mortgage-free wannabe 4 replies 815 views

c.allen34

Please be gentle, It's my first time !
I have £ 62,000 owing on my current mortgage (16yrs remaining) and would love dearly to clear this asap. I will be leaing my current job in under 5 years having completed 22 glorious years in HM forces. I have calculated that on my current deal I will still owe approx £ 52000 in 5 years. I will be receiving a lump sum payment of £ 43,000 the day I leave and approx £ 500 cash in hand a month.
Are there any mortgage products around that will allow me to pay off more of the capital sum in the earlier years and hence clear what I will owe ??.
Is overpaying the only possibility?. What about swapping to a secured loan??. Will this allow me to pay off more of the amount outstanding in 5 years??. I really dont know much about it all.
I am not currently tied in to any mortgage product.
Help.
You guys are the experts.

sammyjammy

You might get more replies if you put this in the mortgage section, a mortgage is a secured loan. Most mortgages these days let you pay off up to 10% of the balance on an annual basis.

Sam

wannasavemoney

Hi C.allen34, I have just arranged a separate standing order to pay off extra off a barclays tracker mortgage which i can change at any time. It would probably be an idea to speak to a mortgage consultant about this and get some proper advice. I'm not realy a fan of barclays (just a woolwich customer who they bought out) but their mortgages are quite flexible and this is useful when you want to tinker with upping payments etc. Look at their website barclays.co.uk. Hope that helps.

MarkyMarkD

If you are definite about overpaying and certain you will be able to afford it, you could simply select a shorter repayment term than your current one such that the required monthly payments match your available funds.

Then you don't need to overpay and you can select a product entirely on the basis of what is best value, bearing in mind that obviously you don't want anything with penalties in 5 years' time.

Kaz2904

Presumably you are on your lenders SVR (high interest rate) if you are not tied in.
A lot of advice at the moment is telling people not to get a fixed rate mortgage yet as the interest rate is high. They are recommending a discounted tracker.
Now if you were to remortgage for a woolwich bank of england +0.17% tracker then you would be paying 5.92% at the moment.
If you decided that you wanted to clear the whole mortgage without touching your lump sum then 5 years would cost £1003.37 (at this rate).
A 20 year term would cost you £370.15 per month.
For mortgage products you can look at www.fool.co.uk or www.moneyexpert.com or www.moneysupermarket.com and you can do your calculations on www.whatsthecost.co.uk
You may well find that with a loan of £52000 you will have cleared the £9000 defecit before you come to clear the whole loan anyway.
The other alternative is to invest in an ISA or high interest rate savings account. £(9000/5)/12= £187.50 needed (with no interest earned) per month to clear your mortgage in 5 years.