Remortgaging but Very Confused.

paul67kestrel

My current mortgage is due for renewal at the end of April 2008

Current Mortgage Details are

Owed £103,000 - Rate: 5.89% - Interest Only

Savings - £10,000

is it better to do A or B

A. Stay on an Interest Only Mortgage, High Savings Account (£10,000), overpay about £100 per month over 25 years....

B. Repayment Mortgage, Pay off £10,000 (leaving £93,000) and have a repayment for 25 years

Or any other suggestions

Any advise would be great.:j

Best regards
Paul

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firesidemaid

what is the value of your property and /or the loan to value rate of the mortgage. over how many years is your mortgage?

do you have a bit more room in your budget? is there a reason why you cannot keep the savings and switch to a repayment mortgage anyway?

is your savings earning more than 5.89% after tax?

have you thought about who you will be moving to? you have left it a lttle late to get your switch sorted before the end of april, so you may end up on an svr for a little while. who are you currently with now?

paul67kestrel

firesidemaid wrote: »

what is the value of your property and /or the loan to value rate of the mortgage. over how many years is your mortgage?

do you have a bit more room in your budget? is there a reason why you cannot keep the savings and switch to a repayment mortgage anyway?

is your savings earning more than 5.89% after tax?

have you thought about who you will be moving to? you have left it a lttle late to get your switch sorted before the end of april, so you may end up on an svr for a little while. who are you currently with now?

Thanks for the reply. The value of the house is around £160,000. If i went to a £103,000 repayment mortgage it will cost around £647. If i went to a £93,000 it would cost around £584. The first would stretch my budget a little.

The other option was to have an interest only for the time being. Sent aside the £10,00 in a high interest account and make overpayments if i can afford each month.

What is your opinion?

Best regards
Paul

firesidemaid

it depends on whether you might need to get to the 10k. it is ok in savings as long as it is earning you more after tax than your mortgage rate.

also, remember you can increase the term of the repayment mortgage (an interest only one never ends) to decrease the cost per month to one that you can afford. eg over 30 or 35 years