Quick question from Newbie

JemimaP_3

Hi everyone

This is my first post so be gentle! I have lurked for a while, between here, OS and DFW.

You have all inspired me that i can clear debts quicker and then even try MF!!

I have a smallish loan (balance is £928), which is due to finish January 2009 but with overpayments i will clear this by the end July 2008.

Also a credit card with around £500 which i will clear by then April 08.

I then wanted to start paying extra on my mortgage (only £56.34) which makes is a round figure of £600 a month.

I have just called my mortgage company who said i can overpay as much as i like but it will either sit as a credit in the arrears account (i've never had arrears on my mortgage) or a can ask for it to go against capital but it will then be subject to an early repayment charge of 6%!!!
Would i be better paying this amount into a savings account until the end of my fixed period which is another 2 years??

Thanks in advance

Thade_2

Can i use a false name to enter online competitions.

FreedomGirl

Hi JemimaP,

I'm a relative newbie here, too, and have a different type of mortgage (offset) so won't be clued up on the details.

But, it seems to me that, if they're going to sting you like that, it's a lot better to put in a savings account (best would be a cash ISA, so it's tax free) until you are at the end of your two year lock in.

That money in the ISA can also double up as an emergency fund.

Well done for planning ahead (sometimes not one of my strengths ) too.

You might want to join the 2008 MFW newbies challenge, too. And £56.34/month extra is not a small sum It will make a difference to the amount of interest you pay and the term of your mortgage!

Best of luck

FG

JemimaP_3

Thanks FG

I will, once my card and loan are cleared. Pay the £56.34 into an ISA and pay it off my mortgage when the fixed period is up

Cheers x