Mortgage - reducing LTV at end of fix

rstevenson1994

Hi,

Apologies in advance if I sound like a novice.:rotfl:

I was a first time buyer, getting a 95% LTV mortgage with Nationwide, on a 2 year fix @ 4.09%.

I am a year into this, and my monthly payments are comfortable. I cant believe the amount of interest I pay, in relation to the reducing loan balance. Now I know this is more at the start, and gradually decreases. I was wondering if it is possible at the end of my fix term, to be able to pay a chunk of my mortgage to drop me down to the next lower LTV bracket, 90%. My workings out is that at the end of this 2 years I'll still be above 90% and on their highest interest rate.

I used their calculators online and if I dropped my LTV to 90%, I could reduce my term from 23 years (25 to start with) to 18 years and still have the same monthly payments (albeit within a few pounds) due to the massive drop in interest rate.

Is this common practice, and will it be something I can easily do? I reckon it'll be around £500-800 to reduce my balance to below the next bracket, should I just over pay a small amount each month and will my LTV automatically be recalculated at the end of my fix, as I want to do another fix again?

Sorry for such a long winded post. Any suggestions would be great.

Thanks in advance,
Ryan

dimbo61

It is nearly always a good idea to overpay your mortgage and even more so if your interest rate is 4.09%
If you have spare money each month and Emergency savings then overpay the mortgage.
You are guaranteed an Interest rate of 4.09% Tax Free.
Others may talk about Pensions and Stocks and Shares ISA,s but getting your LTV below 90% may well help you get a much better longer term deal in 12 months.