One income family of four - can we get ahead even after pay cuts?

Bluegreen143

Called up this morning to change my DD for the mortgage (as we have a joint account now and are moving all the bills to come out of that). My mortgage doesn’t have an online account so while I had the guy on the phone I grilled him on my current status and how to overpay. Here’s the info I got:

Current balance: £112,843.07
Current mortgage redemption date: 11th Dec 2049 😱 (we will be 61 and 65!)
This year’s allowed overpayment amount: £11,352,68
Fixed rate of 1.84% fixed until Feb 2025.

He’s given me the details to make overpayments, he confirmed it will come off the capital but said it wouldn’t reduce the term until the 5 year fix is up and I can then remortgage for a lower term, which I don’t understand. Might need to ask for more info on the mortgage board!

Sarahwithlove

Oooo interesting. Who is yours with? It's good you have details for making overpayments. I thought they just updated it on the yearly anniversary date. 

Baileys_Babe

Mortgage have different terms and conditions, even with the same lender, I feel this is in part to make them harder to compare.

With our mortgage, we are able to make overpayments up to a total of 10% of the original amount borrowed. We can do this as a lump sum or smaller payments as long as the overpayment total does not exceed 10%. When making an overpayment of £500 or more we can choose to reduce the term of the mortgage or reduce the monthly repayments. If the overpayments are less than £500 they will reduce our minimum monthly payments at the next natural recalculation point eg interest rate change or product expiry.

Every time we have taken out a new mortgage product we have reduced the term (without a penlty).
The various reasons for this have been:

• We have built up savings so we have paid of a lump sum
• The interest rate is better so we can pay the same per month but it will take less years to clear
• We can increase our repayment due to an increase in income/decrease in out goings 

Bluegreen143

Very interesting! I hadn’t realised they were all so different. Now I don’t know if I ought to just save the money for now and do a big payment when I have a larger sum...

I’ve decided to move my diary to Mortgage Free Wannabe as I hopefully won’t have any (non mortgage) debts ever again 🤞🏼🤞🏼🤞🏼 And want to focus on savings and mortgage overpayments now. Thank you so much to everyone who has read and posted on this diary - it means so much and has really kept me going and been so encouraging. I hope to see you all on my new diary!! https://forums.moneysavingexpert.com/discussion/6243332/getting-shot-of-the-mortgage-sooner-than-2049/p1?new=1