Final mortgage product

adandem

Hi, hope someone can help.
We have 3 years 8 months left on our mortgage and we owe £17,300.
We are overpaying £80 a month at the moment and was hoping to have cleared it in 3 years.
We have been offered a new deal of 1.99% over years, but have now been told that the product has to run for 3 years 4 months.
We can overpay 10% so by the 3rd year that would be a low figure.
Any advice on what to do? I don't know what's best to do, not a risk taker so it has to be a fixed deal. ERC is 3%.
Many thanks

AnotherJoe

Whats the issue? Over pay to the max and then scale it back to a few quid near the end so it doesn't run out until the end of the term. The extra amount of interest you'd be paying would be minimal.

getmore4less

What's the rate for a 2 year product?

If that runs 2y 4month any excess saved can be overpaid at the end.

Crunch the numbers and se what is best.

You could get a long term 0% purchase card to cashflow to the mortgage and save a bit of interest.

Thrugelmir

Why not reduce your mortgage term to 3 yrs 4 months to mirror the product on offer.

getmore4less

have a look at the numbers

over 3y 8m

£17,300 1.99% £408.03pm, left £0 interest £653.17
That's the most you can save with optimizing to zero%

by year

year left interest
Y1 £12,706.20 £302.52
Y2 £8,020.15 £512.79
Y3 £3,239.99 £628.95

with 10% overpayment max available £80pm
Y1 £1,730/12 £144 so £80pm

£17,300 1.99% £488pm left £11,738 interest £293.72

Overpaying £80pm will save <£10 in the first year

adandem

AnotherJoe wrote: »

Whats the issue? Over pay to the max and then scale it back to a few quid near the end so it doesn't run out until the end of the term. The extra amount of interest you'd be paying would be minimal.

We were hoping to clear the mortgage in 3 years.

AnotherJoe

adandem wrote: »

We were hoping to clear the mortgage in 3 years.

Does the last few hundred quid actually make any difference ?

getmore4less

adandem wrote: »

We were hoping to clear the mortgage in 3 years.

Price up a 2 year fix with overpaying.

Reality is you are dealing with a few £ of interest.

adandem

Thanks for your help. Unfortunately I don't really understand it very well.
Just how much we owe and how quick we can pay.
I'll look into the 2 year fix too, not worth moving banks due to product fee charges.

getmore4less

how much can you afford to pay(total)?


The numbers just using the 3 terms(current 3y 8m, 3y 4m deal and 3y)
3y 8m

£17,300 1.99% £408.03pm, left £0 interest £653.17


3y 4m

£17,300 1.99% £447.36 left £0 interest £594.46

over 3 years

£17,300 1.99% £495.44 left £0 interest £535.88

with the actual amount available can work through each year with 10% limit.

Then with 2y deal(and actual No of month) can do the same for that.