Mortgage overpayment

[davey68]

Forgive my ignorance but my mortgage is up for renewal after a five year fixed period in the next few months. Like most people id like to pay it off ASAP. When it comes to arranging a new deal can i pay a lump sum off the amount i have remaining or is this only an option through monthly overpayments? I have about 10k i could possibly pay off the capital, is this a viable option?

cheers

[The Moose]

Obviously I don't know your financial/work position/commitments, but as you are wondering about paying off 10k, surely if you loose your job/come into financial difficulties it could end up with you defaulting on one/several payments??

Why not go for a rate tracking mortgage at the moment (fairly low rate anyway) and when the rates start to sky rocket, fix it then.

My 2p - nothing more...

[vinnie83]

Once your 5 year fixed rate is up, it's very likely you will be out of any 'tie in period'. That will mean you can pay the 10k off as soon as the fixed rate is up.

If you change mortgage lender, you can simply take the 10k you have into account, and remortgage for a smaller amount, paying the 10k to the old mortgage lender at the time of change.

HTH

[Scraggles]

once the fixed deal ends, you could pay it off with a lump sum and not get charged, the fixed rate deal lets me overpay to some degree, currently £50 - mortgage is around £350, to much more and I get "fined"

[Furyous]

Scotal is your man

[davey68]

Thanks guys! Once the fixed deal is up in a few months i might pay the 10k off the capital. Im not getting much interest on the savings currently so it will help me get rid of the mortgage sooner. The other option is get a new deal which allows decent over payment amounts and go with that. At least if my job goes belly up im not committed to high repayments, but while im doing well job wise i can overpay quite a substantial amount. Thanks for the advice all.

[The Moose]

davey68 said:

Thanks guys! Once the fixed deal is up in a few months i might pay the 10k off the capital. Im not getting much interest on the savings currently so it will help me get rid of the mortgage sooner. The other option is get a new deal which allows decent over payment amounts and go with that. At least if my job goes belly up im not committed to high repayments, but while im doing well job wise i can overpay quite a substantial amount. Thanks for the advice all.

Whatever you end up doing, GOOD LUCK!!!!

BTW, I think Abbey were doing a good deal a few weeks back (don't know if they still are...) and I think overpayments were not a problem...

[texasjohn]

First direct are currently doing an offset mortgage at around 2.89%

That will allow you to keep the 10k flexible, and as soon as your mortgage balance is 10000 you can use the 10000 you've kept aside to pay off the balance.

Give them a call, I've just applied for one myself.

This doesnt constitute financial advice but they will be able to provide that tailored to your situation.

[kjmac]

+1 for first direct.

Have an offset tracker with them, I was lucky to get that set up 6 months ago. Base rate + 0.75% for the life of the mortgage with no booking fee. I can overpay as much as I like and there's no tie in period. Am currently paying 2.3% so I assume they've now introduced a floor on their rate, not sure I'll see any benefit from rates going to 1% now. I made a large one-off payment when switching from A&L to FD to get the LTV I needed, I simply paid the amount to A&L and remortgaged for the lower amount with FD.

Am sure FD still have some reasonable deals going. Can't fault their customer service either, I've always got through instantly on the phone and they don't send you to a call centre in India.

[texasjohn]

kjmac said:

Have an offset tracker with them, I was lucky to get that set up 6 months ago. Base rate + 0.75% for the life of the mortgage with no booking fee.

Fair play to you mate, and with hindsight I hope you are smug about what a good move that was!

We nearly purchased in September, the deal was going to be HSBC's +0.69% tracker with no set up fees.

I really wish we had done.

[kjmac]

texasjohn said:

kjmac said:

Have an offset tracker with them, I was lucky to get that set up 6 months ago. Base rate + 0.75% for the life of the mortgage with no booking fee.

Fair play to you mate, and with hindsight I hope you are smug about what a good move that was!

We nearly purchased in September, the deal was going to be HSBC's +0.69% tracker with no set up fees.

I really wish we had done.

Was very lucky, the only good financial decision I've ever made. I do have to admit feeling smug! I've just got to be careful not to rub people's noses in it. I know a couple of people fixed at stupid rates for long periods. One of who claims they're happy because "We know what we're paying each month.". Er, yes, about £500 too much, WTF?

[scotal]

texasjohn said:

First direct are currently doing an offset mortgage at around 2.89%

That will allow you to keep the 10k flexible, and as soon as your mortgage balance is 10000 you can use the 10000 you've kept aside to pay off the balance.

Give them a call, I've just applied for one myself.

This doesnt constitute financial advice but they will be able to provide that tailored to your situation.

First Directs deals are good. Althoguh as trackers you have to question whether they are the best long term solution.

However they do not provide advice. THey provide information on the schemes they have available and you make your own mind up on the scheme.


OP. You will have to check your current mortgage T&C's to ensure there are no overhanging tie ins on your loan.
Assuming their aren't as the fixed period comes to an end, you can make whatever overpayments you like.
Equally if the overpayment is <10% of your mortgage balance you may be able to make the overpayment at any time without penalty.

[texasjohn]

scotal said:

texasjohn said:

First direct are currently doing an offset mortgage at around 2.89%

That will allow you to keep the 10k flexible, and as soon as your mortgage balance is 10000 you can use the 10000 you've kept aside to pay off the balance.

Give them a call, I've just applied for one myself.

This doesnt constitute financial advice but they will be able to provide that tailored to your situation.

First Directs deals are good. Althoguh as trackers you have to question whether they are the best long term solution.

However they do not provide advice. THey provide information on the schemes they have available and you make your own mind up on the scheme.

Cheers for clearing that up, I often type not quite what I meant!

[hornet]

I'm in an identical situation with an Abbey five year fixed coming to an end in May. Looking to move into a tracker or offset tracker. Need to pay off a chunk to get down to the required LTV, but it wouldn't wipe me out. Be keen to hear how other people would rate the whole remortgage process with either HSBC or First Direct? I've banked with HSBC for ever, so would this be of any benefit, or doesn't that count for anything when it comes to mortgages?

[scotal]

hornet said:

I'm in an identical situation with an Abbey five year fixed coming to an end in May. Looking to move into a tracker or offset tracker. Need to pay off a chunk to get down to the required LTV, but it wouldn't wipe me out. Be keen to hear how other people would rate the whole remortgage process with either HSBC or First Direct? I've banked with HSBC for ever, so would this be of any benefit, or doesn't that count for anything when it comes to mortgages?

Why do you want a tracker?

[hornet]

scotal said:

hornet said:

I'm in an identical situation with an Abbey five year fixed coming to an end in May. Looking to move into a tracker or offset tracker. Need to pay off a chunk to get down to the required LTV, but it wouldn't wipe me out. Be keen to hear how other people would rate the whole remortgage process with either HSBC or First Direct? I've banked with HSBC for ever, so would this be of any benefit, or doesn't that count for anything when it comes to mortgages?

Why do you want a tracker?

That was just an initial thought as the rates were coming down. Given how things have gone lately (in that it can't exactly fall much further!)presumably the rate is only ever going to track back up from now on, so another fixed term might be more sensible, assuming I can get a decent rate. I'm confused! As long as I can overpay without any penalty, I'll be happy, as the intention is to attack the mortgage whilst savings rates are so poor. Current fix is 5.69% on a 80k mortgage, which I'm looking to lop a chunk off of. Time to find an IFA methinks. HSBC / FD look interesting as well. Too much damn choice.

[scotal]

Drop me a line I'll run through your details if you like.