Northern Rock End of Mortgaged Deal (Merged Threads)

tony863

MarkyMarkD wrote: »

Overpaying is worthwhile if the mortgage rate is higher than you can earn on any savings (after tax, if they would be taxable). So if you are paying SVR, you are very unlikely to beat that on a savings account.

Overpaying reduces your balance and hence either your future payments or the time it takes to pay it off - or to make it remortgagable, which is probably most relevant for you.

Otherwise, as you say, you will probably be stuck with NR forever.

the vast majority of your payment each month at this early stage of a mortgage is interest. therefore if you overpay, its directly reducing what you are owe, and therefore you save on the interest.
The great thing with Northern Rock is that you can get the overpayments on the secured part of the loan back within 24 hours. I've ploughed all my savings into my mortgage, and can pull them back if i really need to.

to see how much you can save by overpaying, check these calculators:
http://forums.moneysavingexpert.com/....html?t=155707

i reckon i can save 80k in interest over the life of my 250k mortgage with my current overpayments, and over 8 years!!

Cheers for that guys but I can't work out for the life of me what to do with it. If I post my payment details below could someone run them through the overpayment calculator for me and let me know if it is gonna save me a small fortune?

My mortgage has 33years remaining as of May and until then is fixed at 5.85%. When May comes we'll revert to NR SVR currently 4.79% and can probably afford between £100 and £150 per month overpayment.

My mortgage figures are as follows (correct up until May 2009):

Mortgage - owe £158,750 (£895 per month)

Unsecured loan - owe £22,500 (£127 per month)

Total = About £180,000 at £1022 per month or there and there abouts.

What do you reckon peeps? Thanks in advance

Tony

discostu1978

based on those figures, with the SVR at 4.79%, paying £150 extra a month would save you over £56,000 of interest over the life of the mortgage, and you would pay your mortgage off 9 years earlier.

that said of course, it's based on you having a rate of 4.79% for the life of the mortage, which is very unlikely!

Mary_Hartnell

What will 56K be worth in 33 years time.

Let me see 56K now was worth about 5.5K 33 years ago, if you get my drift.

Do you trust the politicians to once again threaten your generation by raising taxes to pay for the current bail outs and "easings" or do you think they will take the easy way out by inflating away these debts?

jonathanrichardson69

hi all, just wondering does anyone no anything about mortgages? and buy to lets? i currently own an aparmtent and want to let it out, and move to another place. the mortgage lender that i will be using for the new place said i have an excellent credit score and therefore they don't even need proof of earnings, very strange in this time of credit crunch. however, i've been told i need to make sure i have a letter of consent from my mortgage company that i have my flat from. what happens if i don;t get permission? should i just do it anyway? what are the risks? any advise would be great. my current mortgage is with first national, also known as GE money i think. i only want to rent it out because i don't think i could sell for what is owed on the mortgage

tyllwyd

thisisballs wrote: »

I have a fixed rate due to finish in June 2009. When I took the mortgage I also took up their offer of a £1000 contribution to costs. This would be repaid by me only If we leave NR within 6 months of the fixed rate finishing. Northern Rock have always been competetive in the past so I didn't worry too much about accepting the offer.

Now they have written to say they won't be offering any new deals and of course their rate is uncompetetive as they have taken the decision to run down their mortgage business. This virtualy forces me to leave and of course to repay the £1000. I'm not usre it's fair, any one got any views?

I guess you have to treat it as an early redmption charge by any other name - when I took out a mortage in the early nineties if you took a fixed rate deal you were usually tied in for another few years afterwards, and this is effectively the same thing. By the time you've paid this fee and an arrangement fee etc for remortgaging elsewhere, I wonder if it is worth moving, or whether you should stick it out for those six months. Do you think you will be able to find a deal that is better enough for you to save £1000 in that time?

discostu1978

its a good point - but i'd still rather pay off as much of my capital loan now to get as much equity as i can (after taking a 100% mortgage)

Mary_Hartnell wrote: »

What will 56K be worth in 33 years time.

Let me see 56K now was worth about 5.5K 33 years ago, if you get my drift.

Do you trust the politicians to once again threaten your generation by raising taxes to pay for the current bail outs and "easings" or do you think they will take the easy way out by inflating away these debts?

tony863

Cheers for the reply. Initially, it seems like it is definitely worth doing but when you consider that the rate will change and that the money won't be worth as much in years to come, I might as well enjoy the extra few pounds in my pocket and spend them on something nice.

If I can never get away from NR their SVR will increase eventually and i'll end up not being able to pay it off anyway. Seems like I'm fighting a losing battle.

What would anyone else do in my circumstance?

Deleriad

tony863 wrote: »

Cheers for the reply. Initially, it seems like it is definitely worth doing but when you consider that the rate will change and that the money won't be worth as much in years to come, I might as well enjoy the extra few pounds in my pocket and spend them on something nice.

If I can never get away from NR their SVR will increase eventually and i'll end up not being able to pay it off anyway. Seems like I'm fighting a losing battle.

What would anyone else do in my circumstance?

I would be overpaying or saving. You need to be in a position to survive what could be steep interest rises in the future. Providing you keep on overpaying and the credit crunch does ease, you may be able to sneak under the wire for a remortgage in a year or two. Probably not but there's always hope.

Six months ago NR's SVR was 7.5%+ and it probably will be again in a year or two. A good question to ask yourself is what is the maximum interest rate you can afford to pay?

As a couple of quick figures:
Repayment at of 180K over 33 years at 7.5% is: 1230/month
Repayment at of 180K over 33 years at 8% is: 1294/month
Repayment at of 180K over 33 years at 10% is: 1558/month

Obviously the rates might not go that high but you owe to yourself to find some way of surviving if they do. If I were you I would be saving that 150/month and some more besides for this very reason.

Odds are that your house will fall price quicker than you can save but spending your money now is a sure fire way of being in real trouble a couple of years down the line.

NR are very flexible in that you can draw back any overpayments so if things get really hairy well you can get at your money. Basically, overpaying with NR is like paying into a tax-free savings scheme.

Also, I believe but am not exactly sure, that you can specify that you wish to overpay the secured element rather than unsecured. It is probably a moot point but best to do on principle.

Mary_Hartnell

jonathanrichardson69 wrote: »

hi all, just wondering does anyone no anything about mortgages? and buy to lets? i currently own an aparmtent and want to let it out, and move to another place. the mortgage lender that i will be using for the new place said i have an excellent credit score and therefore they don't even need proof of earnings, very strange in this time of credit crunch. however, i've been told i need to make sure i have a letter of consent from my mortgage company that i have my flat from. what happens if i don;t get permission? should i just do it anyway? what are the risks? any advise would be great. my current mortgage is with first national, also known as GE money i think. i only want to rent it out because i don't think i could sell for what is owed on the mortgage

This is not very NR but will the rent cover what GE Money is charging on the mortgage??

Remember this could be an opportunity for GE Money to increase their interest rate.

jonathanrichardson69

Mary_Hartnell wrote: »

This is not very NR but will the rent cover what GE Money is charging on the mortgage??

Remember this could be an opportunity for GE Money to increase their interest rate.

sorry its not NR, however, there was no other thread to ask for advice. the rent more than covers the mortgage. my fixed rate term ends in august so my payments would drop to approx half of what it is.