Newbie MFW - Advice to clear Mortgage in next 4 years

pmortl

Hi All, a very brief history, having 2 bankruptcy's under my belt, managed to get clear of all that and work our butts off at being financially good, now have a decent credit score, savings, credit card (paid off every month - IN FULL Martin!).

Purchased a property almost a year ago £242K, had a lot of help (inheritance) to get started and now have as of today balance of £76K left, Nov 2019 is end of current 2 year (capital & interest repayment mortgage) deal, plan to make 10% overpayment in Nov 2018 of £7.6K and by end of current deal make a £15K payment to start a new remortgage deal of between £50K and £48K thereabouts.

So, to the query, what ideas would be good to clear off this mortgage by Nov 2022. We currently pay £337 pcm on current deal with 23 years left on term and can afford to put aside £1500 pcm (for now and hopefully until the end of the 2022 all things being well). We choose to pay a lower monthly amount as we know if things go bad we can still afford this every month, but if we put our NEW mortgage over a 3 year term at a very high monthly payment and for some reason couldn't make the payment that month we'd be in trouble.

Should we get a new remortgage as Capital & Interest at the same current monthly payment £337 (term of 22 years) or thereabouts and save the extra money and hopefully at the end of the 3 year term when remortgaging pay off in full
OR
perhaps get an Interest only remortgage over a 3 year term paying smaller interest, perhaps about £70pcm and put the extra £267 approx. added to the £1500 monthly saving and pay off lump sum at the end?

I've probably not explained myself too clearly, hence why I'm here for some advice on how to go about clearing this in the next 4 years (1 year left on current mortgage package, and 3 years on new Remortgage to start Nov 2019). We would like to keep monthly payments to a minimum and savings to a maximum and if our health or whatever goes wrong we simply revert back to longer term capital & interest mortgage and wait patiently like everyone else. I look forward to hearing your comments, even if you say my plan is totally bonkers. Thanks in advance. Paul

Urbanshyne

Hi Paul,

I think you're perhaps complicating matters. Assuming that your current financial circumstances remain constant for the next four years, you'll have saved (either as cash or through mortgage overpayments) the equivalent of £72,000. That's pretty much your mortgage without including your regular repayments.

I'd opt for paying out your 10% allowance every year, saving the rest, and possibly looking at fixing for a couple of years after November 2019.

EagerLearner

I agree, keep your current amount, save the rest at a higher rate ideally, so you have access to it should you need. Perhaps once a year skim off as much as you are comfortable for an overpayment, if you wanted to save and overpay for example.