Mortgage overpayments
Discussion
Just looking for a bit of advice on this. My current mortgage is in 2 parts, and one of those is around £80k, on the standard variable rate of 2%+base so currently tracking at 2.25%. The mortgage term itself has another 25 years left on it.
I can make overpayments into this as much as I want, and on speaking with Nationwide, I can take as much of those overpayments back as and when required as long as the product remains the same. I have a plan to extend in a year or 2 so the capital will be needed at some point.
I currently have about £15k sat in an cash ISA which is on a very poor rate and I'm thinking of just putting this into the mortgage for the time being to lower the interest rate. I'm not quite sure how to work out what I'd save from doing so, but it seems like I'll earn more than the few pence every month in the ISA account. It needs to be fairly accessible for when we come to do the build so tying it up in a longer term investment would be no good.
Currently the total sum of the deal is £104,968 yet if I put in the £15k, then it looks to reduce the total payment over the term to £95,201. Subtracting the lower figure, and winding it down to a yearly figure, It looks like £375 per year. Is that the amount I'll save yearly until I take it out? Not sure if I've worked that out right or not. Its a repayment mortgage.
Just trying to work what the best investment for that money will be based on the fact that within 12 months i may be looking to withdraw some.
I can make overpayments into this as much as I want, and on speaking with Nationwide, I can take as much of those overpayments back as and when required as long as the product remains the same. I have a plan to extend in a year or 2 so the capital will be needed at some point.
I currently have about £15k sat in an cash ISA which is on a very poor rate and I'm thinking of just putting this into the mortgage for the time being to lower the interest rate. I'm not quite sure how to work out what I'd save from doing so, but it seems like I'll earn more than the few pence every month in the ISA account. It needs to be fairly accessible for when we come to do the build so tying it up in a longer term investment would be no good.
Currently the total sum of the deal is £104,968 yet if I put in the £15k, then it looks to reduce the total payment over the term to £95,201. Subtracting the lower figure, and winding it down to a yearly figure, It looks like £375 per year. Is that the amount I'll save yearly until I take it out? Not sure if I've worked that out right or not. Its a repayment mortgage.
Just trying to work what the best investment for that money will be based on the fact that within 12 months i may be looking to withdraw some.
Edited by Chicken Chaser on Monday 6th March 15:21
Edited by Chicken Chaser on Monday 6th March 15:46
I have looked at the rates and they are currently lower. We have about 62% LTV so plenty to get the better rates but as this is such a low tracker (Cant get a base mortgage rate anymore) and the longer deals are still above 2.25%. I also have a smaller further advance which is fixed for another few years and will get another further advance when I come to start the build on this place.
MadProfessor said:
Have you considered converting your SVR mortgage to a fixed and maybe an offset mortgage? That way you could pull out the £15K when you need it whilst enjoying what I imagine to be a much lower interest rate. Should be able to get 1.5% or less at the moment subject to LTV.
You also have to factor in set up costs. When rates are this low, set up costs can make a big difference. Gassing Station | Finance | Top of Page | What's New | My Stuff