Mortgage options / advice please

HardSpend

Hi, any advice on how to get rid of this burden asap! Even though it is small compared to most it makes me feel ill thinking about it.

RBOS
Mortgage £36,884.50
Term 21 years
Interest rate 7.19 which sounds high to me:mad:
Currently paying ~£280 a month

I don't have a car or any kids so my outgoings are quite small. I can up my payments to £600-£700 a month, not sure how to go about doing this but plan to just go into bank and do a transfer each month from my current account with HBOS.

Other than overpaying each month is there anything else I should do or consider?

angelavdavis

Does sound a very high rate. Sounds like you have a flexible mortgage:

"The RBS Flexible Choice mortgage allows you take a payment break of up to 6 months once you have made 6 months worth of payments. Interest will continue to be charged during this break though. You can borrow extra money at the same rate. The mortgage rate is guaranteed to be lower than the RBS standard variable rate – for the whole term of the mortgage."

If you don't really need a flexible mortgage, you could get a better fixed rate deal and save your money in a savings account, earning a higher interest rate or switch to an offset account.

This is my favourite overpayments calculator, which will help you see how overpayments will affect your mortgage term. By increasing your payments by £250 per month, would reduce your term to 7.5 years and save you over £23k in interest, so definitely worth considering if you can afford it!

StrawberryJam_2

I have similar circumstance, my mortgage defaulted to the standard variable rate at 7.5% so I went to the existing lender to see what was on offer, fixed rate and tracker rate, then looked to see what was available elsewhere.

I sought flexibility of overpayment - so decided a tracker mortgage was best, as can pay as much as you like into the mortgage, hence reducing the mortgage term. In Summary: I have a HSBC 0.24% tracker to the Bank of England rate, for £45K and term 22 years. (I needed to pay fees: closure of existing mortgage £225, setting up fee at new lender £600; solicitors £500)

Althought I have paid the fees, I used a mortgage calculator spreadsheet to ensure that I would save money overall.

I will have the option to pay off early or not; I could reduce the term to less than 10 years if overpaying. But in the same breath - I am only committed to monthly payments reflecting a 22 year term; additional payments will be setup as a standing order/ direct debit.

HardSpend

Thanks for replies, I prefer the Egg calculator because of the graphs It is surprising just how much money/years you can save by overpaying.

£500 solicitors fees, what do they do for their money? Is it not possible to cut these guys out and do it yourself?

Lorne

Angela, thanks for posting the mortgage calculator - it is fantastic!

HardSpend

so I went to London and Country for a deal, they offered me 5.99 fixed rate for 3 years from the Bank of Ireland, the only fee is for £195. After the first 3 years I can move away without any fees. Decided to change to a 10 year mortgage instead of the remaining 21.

Can overpay 10% of mortgage a year but only in lump sum £2000 payments which doesn't make any sense to me, i.e. pay £2000 then I'm left with £1700 more to make up the 10% but I can't pay that because it's not a £2000 lump payment.

dimbo61

well done hardspend on getting a better deal with bank of ireland
some of the terms are strange so try and work round them.
you have cut the term to ten years and you want to overpay as well
if you also save into an ISA with barclays paying 6.5% you can then use this money to pay a lump sum off the mortgage at the end of the three year deal.
and also build up the emergency fund of savings if you need it GOOD LUCK