Mortgage question - which is best?

Gazzadfc

Currently ion a variable mortgage 5.99% which just over 13 years left to pay at £272 a month.

I am currently looking at these options
One is two opt for 2 year tracker 4.94% which will bring the payments down to £263 a month and we WOULD then overpay another £35 a month to help get some of the capital down

or

Opt for a 2 year tracker and reduce then mortgage to 11 years and be paying £298 a month with NO overpayments.

The questions is which of these two options is best - the overpayments on the 1st option will reduce my term of mortgage or will option2 be best?

Any interest rates increases will not affect the ability to pay - provided it does not go up 3 or 4%

Thanks

herbiesjp

It will depend on the amount of the loan, and what the valkue of the property is.

You will also need to look at whether the fees on the schemes will make it worthwhile changing also.

Joe_Bloggs

You don't say how much you owe. My guess is its £30000. you don't mention the value or type of property. You will have trouble getting a mortgage once the amount owed is less than £25000. My suggestion is to consider a 10 year fixed rate eg Nationwide or similar at 4.89%. Mortgage/brokers fees become a significant proportion of the total cost for such small amounts.It might be better to pay these costs only once.
Est monthly cost £316 per month without any interest rate risk. There may be fees to leave your existing lender and join another. Nationwide ask for £389 to join.
The latter are probably the most fussy about lending anything so consider similar alternatives and make sure that your credit history is good. Have you considered negotiating with your current lender for a better rate ?

J_B (Not a financial advisor but a financial consumer).

Gazzadfc

Thanks

Currently with the Nationwide and the 2 year tracker is 4.94% with no reservation fee.

Value of property is £100k +
Outstanding mortgage is £32300

I am sure if I asked the mortgage adviser at the Nationwide they would suggest if I wanted to pay the mortgage off quicker then I up my payments to £299 a month and opt for a 11 year mortgage this way they would still make their amount on the interest.

I have a feeling it may be best to get a 2 year tracker at £263 a month for 13 years and overpay £35 a month as this may mean paying the mortgage off maybe 2 year early.

Dont wont to fix the rate as I think we will see changes both up and down, also dont want to tie myself in with any lender for more then 2 years as circumstances might change.

Joe_Bloggs

At the end of whatever two year deal you pick you will be back where you are now on Nationwide's 'BVR' (approx 6%). That is standard variable rate (SVR) to anyone else including the FSA. If you dip below £25000 then you will struggle to get another mortgage without borrowing more money.

Try the amortisation calculator option in this free product.
http://www.hsh.com/hbcalc.html You can get monthly breakdowns on interest,capital and add in overpayments, reduce the term etc.

J_B.