Obviously didn't pay attention to the mortgage broker...

Badger_Lady

Well, I was in such a rush and a hassle at the time! Selling my old flat, buying my new house... and all the while renting a room in a new city, working a new job, and travelling between all three sites...

After feeling really pleased with myself that I've got a tracker rate mortgage at +0.5% for the next 5 years, I've just found out it actually ends next June (2009) :rotfl:

So I've actually got just over a year before I switch to their variable rate mortgage, currently +2% :rolleyes:. Thankfully I'm not tied in at that point, but regretfully it will add £180pcm to my mortgage.

So, I need to review my situation - I'm hoping to go back to Uni next September (2009), so was trying to keep my savings available to use for living expenses. But if I'm remortgaging before then anyway, should I actually just pump everything into the house (reducing the interest)?

• I've got £300 a month going into my cash ISA.
• I'm currently paying £113 a month towards the capital of my mortgage.
• I could probably afford to pay another £300 a month.

People who pay more attention to mortgages than I obviously do - what would you do now?

UK007BullDog

How much is your mortgage and how are you going to fund your stint at Uni?

Badger_Lady

Hia - the outstanding mortgage is £137,000 on a house recently valued at £155,000 (though I realise this is subject to variation). The monthly interest payments are £637, but I overpay on this to a total of £750. Term is currently 35 years (no idea why - I didn't get on with my broker at all!).

I was hoping to fund my university through:
- Lodgers (currently in place, paying £820pcm, tax mostly off-set)
- Saturday job
- Welsh Assembly grants, which cover most tuition fees etc
- Top-up of £2,000 a year, which could be in the form of a student loan but I'd prefer it were from savings.

The course I'm embarking on is 5 years full-time.

UK007BullDog

Well, you still have over one year and you might have to stay with your lender as the incomes you listed will not qualify to remortgage to another lender. So when your deal finishes then you would have to take whatever they offer you as an existing customer.

New info: If you are employed still in June 09 then you can remortgage with existing or new lender, pending on income, credit rating and the usual stuff. Find yourself a new broker that will explain things to you. Also take the time to read Martins guide and the FSA consumer guide to mortgages. This time spent could make a lot of difference in your pocket.

As for the term of 35 years it makes no difference if 25 years or 35 years if interest only, as you are just paying interest. However eventually you would want to repay the mortgage so once you are finished with your studies you should re-evaluate your situation and start a proper repayment mortgage with the aim to be mortgage free before retirement or even earlier. In June next year go for a 5 year mortgage to cove your Uni time and a bit extra to give you time to settle in a new job and proof of income to then remortgage to the best deal available out there.

If you can afford to keep overpaying that would be perfect but can understand if not possible.

Badger_Lady

Ah - but I'll be remortgaging before I enrol at Uni, so my income then will be around the £35k mark (currently £32k).

I can very easily afford to keep overpaying (as far as I'm concerned this is as good as a "proper repayment mortgage"???), my question was whether I should pump more into it..?

UK007BullDog

Changed the info I posted. Misunderstood your first post. I thought you were starting your Uni stint this year and not next.

UK007BullDog

Well, it depends how much you can overpay without being charged for the priviledge. Why dont you ask your lender for the Keyfacts or the offer letter you got. All info will be on there.

As for a "proper" repayment mortgage you would be paying more than the £150 you are paying now on top.

UK007BullDog

Or you can save it all up and use it to live on as an emergency fund. Only you will know what you can afford, what you will need once you start studying. The general household bills will stay the same so you still have to budget for them.

Badger_Lady

UK007BullDog wrote: »

As for a "proper" repayment mortgage you would be paying more than the £150 you are paying now on top.

Really? I was basing it on this calculator, which came out at £748 for repayment..? http://www.moneymadeclear.fsa.gov.uk/partners.aspx?Partner=6B5B2DDD-606D-48A8-9D3B-F7A9E78F63FC&Tool=mortgage_calculator

Badger_Lady

OK - I've just called Halifax and upped the Direct Debit to £850.

By my calculations, that means that by June 2009, I'll have (approximately):
- £5,000 ISA savings
- £15,000 capital on a valuation of £150k (before the HPCs attack me on this, I live in a fast-developing area, so a £5k drop is my conservative estimate)

Therefore I'll be looking at a LTV of 86%, with no liquid savings as I enter Uni (but access to Student loans). This does mean I'll leave Uni with £10k debt but I suppose that's the situation all students face these days.

Any faults with these calculations / opportunities missed?

teabelly

Might be worth having a look at the oneaccount which is a flexible current account style mortgage. You can then place all your savings into it so it will reduce your mortgage interest and it will give you a buffer up to whatever facility you arrange. You will pay a higher rate of interest but it offers supreme flexibility if you don't quite know how your finances will pan out while you are studying.