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How best to deal with the rising interest and the way to become mortgage free.
yellowplum
Posts: 95 Forumite
I thought I would throw this out as I am not sure the best tactic in the current climate to become mortgage free. The goal has always been to reduce my mortgage with overpayments as much as possible.
I currently have two products with the same provider. The first is worth around £75k outstanding. It is Interest Only the current rate is 1.89% for another 2 years and 3 months.
The second, a repayment model is £10k outstanding has a rate of 2.69% for another 6 years and 1 month.
I am allowed 10% overpayment of the outstanding capital on each anniversary.
My question, I have some money (varied depending on work) to be able to over pay. Up to now I was saving in a regular saver obtaining a higher rate of interest and then when it matured at the end of the year I would take the lump sum and pay off what I could.
However, since the higher balance and lower rate matures first I am contemplating should I pay all my money towards this and reduce this as much as possible before it renews. However I also want to be able to over pay the other part and clear it before it matures, of very close to the date it renews and therefore that will be done.
How would you reduce them?
I currently have two products with the same provider. The first is worth around £75k outstanding. It is Interest Only the current rate is 1.89% for another 2 years and 3 months.
The second, a repayment model is £10k outstanding has a rate of 2.69% for another 6 years and 1 month.
I am allowed 10% overpayment of the outstanding capital on each anniversary.
My question, I have some money (varied depending on work) to be able to over pay. Up to now I was saving in a regular saver obtaining a higher rate of interest and then when it matured at the end of the year I would take the lump sum and pay off what I could.
However, since the higher balance and lower rate matures first I am contemplating should I pay all my money towards this and reduce this as much as possible before it renews. However I also want to be able to over pay the other part and clear it before it matures, of very close to the date it renews and therefore that will be done.
How would you reduce them?
0
Comments
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What is the reason for overpaying rather than putting the money in to a savings account with a better rate than either loan is costing you?0
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Because otherwise you loose the overpayment capability as a whole and the product is not going to last for long before I end up paying double or even triple what I am currently paying.0
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Can you not overpay an unlimited amount once your fixed term ends though?yellowplum said:Because otherwise you loose the overpayment capability as a whole and the product is not going to last for long before I end up paying double or even triple what I am currently paying.0
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