paying my mortgage off query please.
Discussion
Due to a death in the family, Me and Mrs400 are due to receive a windfall for which we are considering paying the mortgage off with.
My question is say last years statement says you owe £20,000 but you have an early redemption fee of £740 to pay if you pay it off early.
So "IF" its £20,000 and over the remaining 4years, will I still have to pay all the interest charges?
Or will it get knocked off the final figure,
My question is say last years statement says you owe £20,000 but you have an early redemption fee of £740 to pay if you pay it off early.
So "IF" its £20,000 and over the remaining 4years, will I still have to pay all the interest charges?
Or will it get knocked off the final figure,
Edited by cossy400 on Saturday 6th August 06:51
You should save some interest by paying off early, but with only 4 years left I imagine most of your monthly payment is going to pay off the principal, there won't be much of it going to interest. So with a £700+ fee to pay you might well find you won't save much. Having said that, I'm not a financial advisor, and the simplest thing to do is ask your lender for an early settlement figure. You don't have to follow through with it.
I went through a few yrs of having enough savings to cover my mortgage. It worked then because interest was about the same on both.
Emotionally settling the debt was a big thing though (even though I could have settled at any time) So I did.
Boy did I walk tall that day!
You shouldn't have to pay the next 4yrs interest, do you have to pay the settlement charge anyway? whether you pay down early or not? Or could you just reduce the debt to a nominal sum and keep servicing a balance of £100 or so?
Emotionally settling the debt was a big thing though (even though I could have settled at any time) So I did.
Boy did I walk tall that day!
You shouldn't have to pay the next 4yrs interest, do you have to pay the settlement charge anyway? whether you pay down early or not? Or could you just reduce the debt to a nominal sum and keep servicing a balance of £100 or so?
Edited by PositronicRay on Saturday 6th August 09:19
Paying off a mortgage early isn't always financially astute, especially when there's early redemption fees. However, you need to offset that against the sheer joy of coming out of the bank/building society and running down the high street shouting "I've paid it off, I've paid it off".
Cheers PHers, This is the thing,
Fag packet maths not man maths (YET)
Last yrs statement say the overall interest was £560 odd for the year.
Times that by the 4 years remaining and call it £2200, minus the the £740 odd redemption figure im still winning right???
And I will be ringing Monday anyways to get the figures straight in my head and then decide what to do.
Worse case ill still the exact amount in another account and divert the mortgage to be took out of that account instead. Either way ill be mortgage free effectively.
Fag packet maths not man maths (YET)
Last yrs statement say the overall interest was £560 odd for the year.
Times that by the 4 years remaining and call it £2200, minus the the £740 odd redemption figure im still winning right???
And I will be ringing Monday anyways to get the figures straight in my head and then decide what to do.
Worse case ill still the exact amount in another account and divert the mortgage to be took out of that account instead. Either way ill be mortgage free effectively.
Jockman said:
What's the redemption fee for? The mortgage itself or for a product you're on?
Why not leave a small amount on the mortgage for any future borrowing / credit rating purposes?
Early repayment redemption fee. Why not leave a small amount on the mortgage for any future borrowing / credit rating purposes?
And how does it work leaving the small amount on it, in terms of say I leave £100 on there do I just pay like a pound a month?
Don't really understand, and have never been in the position till now.
In terms of for future borrowing thou, I doubt we ll be moving and borrowing for a car is nt like a mortgage so shouldn't be an issue.
You've been discussing it for 3 days on a motoring based forum when you could have just rung them up.
I rang mine yesterday, yes even Sat afternoon they were handling enquiries. With mine I can do it 2 ways: End it in full or pay it all off completely yet keep it live incase I need it.
I'm doing the latter.
Ring them up.
I rang mine yesterday, yes even Sat afternoon they were handling enquiries. With mine I can do it 2 ways: End it in full or pay it all off completely yet keep it live incase I need it.
I'm doing the latter.
Ring them up.
cossy400 said:
Due to a death in the family, Me and Mrs400 are due to receive a windfall for which we are considering paying the mortgage off with.
My question is say last years statement says you owe £20,000 but you have an early redemption fee of £740 to pay if you pay it off early.
So "IF" its £20,000 and over the remaining 4years, will I still have to pay all the interest charges?
Or will it get knocked off the final figure,
That £20,000 probably doesn't include the 4 years interest, just in case you think it does.My question is say last years statement says you owe £20,000 but you have an early redemption fee of £740 to pay if you pay it off early.
So "IF" its £20,000 and over the remaining 4years, will I still have to pay all the interest charges?
Or will it get knocked off the final figure,
The normal drill is interest gets added each year to the outstanding balance.
227bhp said:
You've been discussing it for 3 days on a motoring based forum when you could have just rung them up.
I rang mine yesterday, yes even Sat afternoon they were handling enquiries. With mine I can do it 2 ways: End it in full or pay it all off completely yet keep it live incase I need it.
I'm doing the latter.
Ring them up.
Been discussing it for 3 days?? post went up late Fri night after I found out about said windfall. I rang mine yesterday, yes even Sat afternoon they were handling enquiries. With mine I can do it 2 ways: End it in full or pay it all off completely yet keep it live incase I need it.
I'm doing the latter.
Ring them up.
And ive said ill be ringing but seeing im sure others have been thru it I thought I little post here wouldn't hurt, to get a heads up.
Jees tough crowd at times for no reason.
And its a motoring based forum with a finance section, and a lot of other sections too.
Edited by cossy400 on Sunday 7th August 11:28
cossy400 said:
And its a motoring based forum with a finance section, and a lot of other sections too.
.....and the thread can throw up interesting information and opinions that we wouldn't see if you hadn't asked. If the OP of any thread gets an actual sensible answer to the actual question asked that's a bonus.cossy400 said:
Been discussing it for 3 days?? post went up late Fri night after I found out about said windfall.
And ive said ill be ringing but seeing im sure others have been thru it I thought I little post here wouldn't hurt, to get a heads up.
Don't fret about it, you're fine. There's no such thing as a stupid question in the world of finance.And ive said ill be ringing but seeing im sure others have been thru it I thought I little post here wouldn't hurt, to get a heads up.
Four things,
1. As PositronRay said, the feeling of "mortgage free" is very good indeed!
2. Do the sums and you'll find it's more expensive to keep the mortgage and put the money in the building society than to pay the mortgage off.
3. IMO Premium Bonds are just as bad. The rate of return is very low and yes, you might get the big win but you're far more likely to suffer a violent death or some dreadful disease. I hate the darn things, even if they are "safe", although others are enthusiastic about them. It's just personal opinion.
4. To make sense of keeping the mortgage you need to invest the cash into something which will give you (after tax, if applicable) a better % return than the % you are paying for the mortgage. I do not know of any "safe" way for you to achieve this.
If it was me I'd pay off the mortgage immediately, enjoy walking tall and look forward to having more cash to spend every single month!
It really depends what Mortgage product you're on - so you need to talk to your mortgage provider and get the information to make your decision.
The interest you paid in the last year will decrease significantly over the next 4 years as the principle is reduced to zero over the period. Therefore you can't use last years interest and multiply it by four.
Don't confuse the expiry of the product with the time when you get to a zero balance as the 2 don't normally coincide. You may find your mortgage product expires earlier than 4 years (and with it the early repayment penalty), so you need to factor that in.
Questions I would ask them (if you don't know already):
- what interest rate am I on today?
- when does my mortgage product expire?
- what early repayment charge would apply if I paid the amount off today?
- how much interest will I pay between now and product expiry?
And to complete the picture, I decided to continue my mortgage as I would be getting more in savings interest (after tax) than I would save by paying mine off early.
Hope that helps.
The interest you paid in the last year will decrease significantly over the next 4 years as the principle is reduced to zero over the period. Therefore you can't use last years interest and multiply it by four.
Don't confuse the expiry of the product with the time when you get to a zero balance as the 2 don't normally coincide. You may find your mortgage product expires earlier than 4 years (and with it the early repayment penalty), so you need to factor that in.
Questions I would ask them (if you don't know already):
- what interest rate am I on today?
- when does my mortgage product expire?
- what early repayment charge would apply if I paid the amount off today?
- how much interest will I pay between now and product expiry?
And to complete the picture, I decided to continue my mortgage as I would be getting more in savings interest (after tax) than I would save by paying mine off early.
Hope that helps.
Ozzie Osmond said:
If it was me I'd pay off the mortgage immediately, enjoy walking tall and look forward to having more cash to spend every single month!
Suppose it's a choice between leaving a small mortgage with payments you won't really notice (£100/Month or so) and a 5 figure rainy day fund, or paying it off totally and leaving liquid savings right down to a minimum, say 6 months living expenses?
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