Should I extend the years?

judy2357

We have a relatively small mortgage (£13000) costing £250 per month, we need to to cut our monthly outgoings and by extending the term from 6 years to 10 years this would free up about £100 per month which would help our financial position. Apparently there is only a £10 admin fee involved. Would appreciate your views?

Treadmill

That would be a last resort as if it was me, you'll end up paying thousands in extra interest. are there any other ways you can trim your outgoings to save £100?

_Andy_

If needs must with your outgoings then go for it. Obvious negative point is the increase in the interest you'll be paying over the extra 4 years.

beecher

Something doesn't add up - if your mortgage is £13,000 over 6 years you'd have to be paying an interest rate of 11% to be paying £250/month. Under this scenario extending the rate by 4 years would save you £70/month so something isn't correct somewhere.

If you were paying 6% interest rate you'd be paying £215 just now, and would save £61/month. Are there arrears or something added?

judy2357

Treadmill wrote: »

That would be a last resort as if it was me, you'll end up paying thousands in extra interest. are there any other ways you can trim your outgoings to save £100?

Will ring up Building Society and enquire exactly how much extra interest we will incur. Have been through all monthly bills individually and tried to cut price without actually cancelling anything. I have had my working hours cut recently and am sinking a bit and dont want to get into debt. We have £3500 approximate on credit card, so considered putting this on mortgage but was told this would incur around £349 application fee for further borrowing and £499 fee for setting up on a different product. By doing this would only save around £40 per month.

judy2357

beecher wrote: »

Something doesn't add up - if your mortgage is £13,000 over 6 years you'd have to be paying an interest rate of 11% to be paying £250/month. Under this scenario extending the rate by 4 years would save you £70/month so something isn't correct somewhere.

If you were paying 6% interest rate you'd be paying £215 just now, and would save £61/month. Are there arrears or something added?

Facts are as follows:-

Halifax mortgage

5 years 3 months left to pay.

£4000 on 5.95% (Tracker) (I think this product ends Oct)
£8800 on 7% (Standard Variable rate)

Last year we borrowed extra £10,000 and purchased car £4200 and had kitchen installed, both of which were essential. There are no arrears on this account and we are not in any arrears with any of our bills.

Sorry omitted to say last letter from Halifax said we needed to pay £244.63 per month and I amended our S/O to £245.

beecher

I see - it might be worthwhile looking into changing your deal in October and putting the whole £13,000 onto one product. If you book in to get a mortgage review with Halifax they should be able to give you the different options availalbe to you but taking the £8,800 off the SVR and onto a tracker or fixed rate might end up a bit cheaper (particularly if the SVR goes up later in the year) , and you could look at the different payments for 5/7/10 years and see what you're comfortable with.

Good luck.

edit: I think most of the deals with Halifax have to be completed by August so they might not set anything up for you for a couple of months - would you be okay to hang on til then?

silvercar

Halifax have some good deals for existing customers, even allowing you to move to new products just before the end of your current deal. It may be worth asking them if they can move everything to one fixed deal now.