Overpay mortgage?
Discussion
Coming to the end of my 2 year fix in March. Paying 4.8% currently. House is worth maybe 160k and mortgage is 128k. I have another 10k which I can put into this to give me a LTV of 75% and get a rate below 2% either on a fix or tracker (which would be best at the moment?) also how is the value of my house determined do I just present what I think it's worth and they make a decision to whether that's reasonable?
I could then keep my term at 35 years and pay only around £350 per month which is around 14% of my net pay and leaves me a fair bit of spare money each month. Or I could shorten the term to say 25 years and keep the payments the same but have it paid off a lot quicker..... Albeit with less money to enjoy now while I'm young (late 20's) obviously paying it off as fast as possible makes financial sense but this will only benefit me way off in the future. I imagine kind of getting the payment down to a minimum and then treating it like a rent payment.....except every payment is one less instead of one more as with renting. Or I could keep the payments low and the term long but invest the money I save into something and then pay it back off the mortgage at a later date.
Opinions and advice appreciated.
I could then keep my term at 35 years and pay only around £350 per month which is around 14% of my net pay and leaves me a fair bit of spare money each month. Or I could shorten the term to say 25 years and keep the payments the same but have it paid off a lot quicker..... Albeit with less money to enjoy now while I'm young (late 20's) obviously paying it off as fast as possible makes financial sense but this will only benefit me way off in the future. I imagine kind of getting the payment down to a minimum and then treating it like a rent payment.....except every payment is one less instead of one more as with renting. Or I could keep the payments low and the term long but invest the money I save into something and then pay it back off the mortgage at a later date.
Opinions and advice appreciated.
Speak to sarnie, he'll sort you out with the mortgage
I'm in a similar boat, tied into a short fix but am likely to get another when it expires - don't see rates moving anywhere soon personally
I'm also mid-20's, aim is to keep the payments where they were and reduce the term, with my salary going up 15% pa as I progress in my career, plus the ability to over-pay before I get the next fix I prefer the flexibility of a high-ish payment to start knowing that it'll get better, but not too high so that I'm safe if I need it/decide to go away.
Life is a balance...
Eg. When I re-mortgage I'll be able to reduce the current 38 year term to 18 with manageable (just) payments, in reality I'll likely go for 25-30 as a half way house, keeping payments at the current rate so I can upgrade the car/pay down other debt/pay for big life events which may be on the horizon some time soon
I'm in a similar boat, tied into a short fix but am likely to get another when it expires - don't see rates moving anywhere soon personally
I'm also mid-20's, aim is to keep the payments where they were and reduce the term, with my salary going up 15% pa as I progress in my career, plus the ability to over-pay before I get the next fix I prefer the flexibility of a high-ish payment to start knowing that it'll get better, but not too high so that I'm safe if I need it/decide to go away.
Life is a balance...
Eg. When I re-mortgage I'll be able to reduce the current 38 year term to 18 with manageable (just) payments, in reality I'll likely go for 25-30 as a half way house, keeping payments at the current rate so I can upgrade the car/pay down other debt/pay for big life events which may be on the horizon some time soon
bogie said:
Get on 2% and reduce to 25 years max ...that extra 10 years costs you thousands in interest. Pay off as fast as you can whilst the rates are low...you will thank yourself in future
^^^ Absolutely this! How did you get suckered in to such long terms? They barely reduce the monthly payments (compared with 25 years) and cost an absolute fortune in extra interest over the long term.And I personally, dislike fixes as well. Interest rates don't usually rise very much in a short period and most fixes are very short compared with the whole length of the mortgage. Fixing is essentially a form of short term insurance - with hefty premiums. Like all insurance, it's only worth paying for if you really need it. If the OPs payments are only 14% of net income, for instance, it doesn't sound as though the insurance is really necessary.
http://www.moneysavingexpert.com/mortgages/mortgag...
Try a few variations in this link. I have been overpaying a 25year mortgagee for the last 8 years. I reckon I can be mortgagee free in 8 years, thus saving loads of interest and for the final nine years my £600 per month payment will be mine (or more likely the wifes
)
Time goes quickly and with hindsight, paying more off the mortgagee earlier, would have meant even more.
Just trying to persuade the missus to overpay our mortgagee with some savings, but her caution says we need savings......
Try a few variations in this link. I have been overpaying a 25year mortgagee for the last 8 years. I reckon I can be mortgagee free in 8 years, thus saving loads of interest and for the final nine years my £600 per month payment will be mine (or more likely the wifes
)Time goes quickly and with hindsight, paying more off the mortgagee earlier, would have meant even more.
Just trying to persuade the missus to overpay our mortgagee with some savings, but her caution says we need savings......
http://www.moneysavingexpert.com/mortgages/mortgag...
Try a few variations in this link. I have been overpaying a 25year mortgagee for the last 8 years. I reckon I can be mortgagee free in 8 years, thus saving loads of interest and for the final nine years my £600 per month payment will be mine (or more likely the wifes )
Time goes quickly and with hindsight, paying more off the mortgagee earlier, would have meant even more.
Just trying to persuade the missus to overpay our mortgagee with some savings, but her caution says we need savings......
Try a few variations in this link. I have been overpaying a 25year mortgagee for the last 8 years. I reckon I can be mortgagee free in 8 years, thus saving loads of interest and for the final nine years my £600 per month payment will be mine (or more likely the wifes
)Time goes quickly and with hindsight, paying more off the mortgagee earlier, would have meant even more.
Just trying to persuade the missus to overpay our mortgagee with some savings, but her caution says we need savings......
I chose to leave my mortgage over a longer term and overpay it (by about 60%) each month which effectively brings the term down. This leaves me in more control in my mind, as I can stop over paying at any point if my circumstances change. Also with my bank I can use the over payment reserve at any time to pay the mortgage. If things went tits up for me I could stop paying the mortgage for a nearly a year.
In conjunction with that I am saving into regular savers account which gives me 6% (gross) return. And have a few quid in an ISA.
In conjunction with that I am saving into regular savers account which gives me 6% (gross) return. And have a few quid in an ISA.
Ozzie Osmond said:
^^^ Absolutely this! How did you get suckered in to such long terms? They barely reduce the monthly payments (compared with 25 years) and cost an absolute fortune in extra interest over the long term.
And I personally, dislike fixes as well. Interest rates don't usually rise very much in a short period and most fixes are very short compared with the whole length of the mortgage. Fixing is essentially a form of short term insurance - with hefty premiums. Like all insurance, it's only worth paying for if you really need it. If the OPs payments are only 14% of net income, for instance, it doesn't sound as though the insurance is really necessary.
The longer term was helpful as I earn less when I took it out. And it also only costs more if you actually take the full 35 years to pay it, you can change the term at any time pretty much. Keeping it at 35 years means if the interest rates were to triple i would still be comfortable but if they don't I can just overpay lump sums like I am this time. Makes sense about the fix though. Maybe I will get a tracker until the rates start climbing and then look at fixing.And I personally, dislike fixes as well. Interest rates don't usually rise very much in a short period and most fixes are very short compared with the whole length of the mortgage. Fixing is essentially a form of short term insurance - with hefty premiums. Like all insurance, it's only worth paying for if you really need it. If the OPs payments are only 14% of net income, for instance, it doesn't sound as though the insurance is really necessary.
Ozzie Osmond said:
^^^ Absolutely this! How did you get suckered in to such long terms? They barely reduce the monthly payments (compared with 25 years) and cost an absolute fortune in extra interest over the long term.
And I personally, dislike fixes as well. Interest rates don't usually rise very much in a short period and most fixes are very short compared with the whole length of the mortgage. Fixing is essentially a form of short term insurance - with hefty premiums. Like all insurance, it's only worth paying for if you really need it. If the OPs payments are only 14% of net income, for instance, it doesn't sound as though the insurance is really necessary.
This issue is the with a fix I can get a rate of 2% for 2 years, on a tracker I've got 2.5% + base - even if interest rates aren't rising I know which ones cheaper for me until I have to make the next choice...And I personally, dislike fixes as well. Interest rates don't usually rise very much in a short period and most fixes are very short compared with the whole length of the mortgage. Fixing is essentially a form of short term insurance - with hefty premiums. Like all insurance, it's only worth paying for if you really need it. If the OPs payments are only 14% of net income, for instance, it doesn't sound as though the insurance is really necessary.
Your mortgage is the biggest debt you'll ever have. Get rid of it ASAP.
Similarly to you, I was up for renewal early this year (2 year fixed). Was on 4.2% with £180k mortgage (90% LTV at point of purchase
). Now I've just signed on a 5 year fixed at 2.49% with an LTV of 69% due to insane house price rises in this part of the country.
I've taken 8 years off my term and planning on overpaying when I can too to bring it down.
Similarly to you, I was up for renewal early this year (2 year fixed). Was on 4.2% with £180k mortgage (90% LTV at point of purchase
). Now I've just signed on a 5 year fixed at 2.49% with an LTV of 69% due to insane house price rises in this part of the country.I've taken 8 years off my term and planning on overpaying when I can too to bring it down.
Ozzie Osmond said:
GroundEffect said:
I've just signed on a 5 year fixed at 2.49%
At face value that sounds decently attractive. - Any fees?
- What happens at the end of the 5 years?
- £1,495 built in to my total. Considering I have near 20 years left to go, no brainer.
- Tracks base plus 3% but I will be going for a new offer when the time comes...mainly because I'm looking to move in 5 years.
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