Which Mortgage is best for me????

leeshowes

Hi, I have just received the dreaded news from my mortgage provider that i will be coming out of my fixed rate period on april 1st.
I am also in the process of selling a second property that should give me a tidy profit.

The problem i am trying to solve is what to do next.....

Offset the profit as savings (so i can get to it if need be)?
Reduce my mortgage by the profit and reduce the term or repayments?

Ideally i would like to reduce my outgoings so that both my partner and i can relocate our jobs to our home town of Brighton rather than the 120mile round trip commute to London each day. (the money is good but the journey is driving me crazy.) But the idea of paying my mortgage off quickly to be mortgage free in 5-10 years makes the commute more bearable. If that makes sense.

The basic figures are as follows:
Current Mortgage £160k
Profit from 2nd property: £90k
Current Savings: £15k

Can someone help me with the maths????

17Dave

An offset would be a viable option - you will not pay interest on up to £105k of your mortgage, however, you get no interest on the savings (you are unlikely to match the rate of the mortgage in a savings account - except ISAs).

You then have some flexibility to either reduce your monthly payment or keep it higher and aim for mortgage free!

So at 5.5% interest only you would have a mortgage of £160k with an offset of £105k and pay interest on only £55k.

Interest on £160k @ 5.5% = £734 per month
Interest on £55k @ 5.5% = £253 per month

So up to £481 per month to overpay the mortgage and clear it early. Use one of the calculators on this site to see how long.

leeshowes

Thanks 17Dave

leeshowes

Is It possible to get 5.5%? My rate is alot higher than that i think! Maybe i just got bad rate i currently pay £1045. I know it was harder toget the mortgage as it was in addition to the one on the property in London but £300 a month less????? Have i been taken for a mug???