jjones

use Karl's Mortgage Calculator

to see how much a small overpayment can save you in the long term and a host of other information

Dream Weaver

Our strategy is to reduce the amount of time the mortgage is over, and increase the monthly payments every 2 years (as salaries rise etc).

So we took our 25 year mortgage out in 2005 with a low fixed rate for 2 years. After that 2 years (in 2007) we had 23 years remaining on the mortgage but the fixed offer was at an end.

So we got our IFA in to do us a new mortgage with another low fixed offer rate, and at the same time we remortgaged for 20 years instead of 23 so in 2 years we have knocked 5 years off the mortgage and its only another £100 or so extra per month which we can now afford.

In 2009 we will remortgage again and rather than redoing 18 years we will maybe go for 16 years.

Doing it this way we clear it off much quicker for not much extra outlay per month. Only spanner in the works is we now want a big extension which will cost £70k or so so we may have to re-think the whole strategy.

I'm certainly with Diesel on the fact the life is too short though, so this strategy only works if you can afford to do it without sacrificing stuff.

Bakerman

Don't need a flexible mortage to overpay (they are usually charged at a premium over fixed/capped etc), most lenders allow an overpayment to a certain amount for no charge. For example my £1600 a month mortgage is overpaid by £1000 per month, if I overpay more than £1000 though I start to be charged as Nationwide deem it to be early settling.

We never commit to having to pay a much higher amount, much rather have the option to.

Of course if you can get back more from savings than you can overpaying mortgage (allow for tax etc) then don't overpay, just keep the cash invested.

Dream Weaver - just make sure the charges (from both the IFA and lender) are sensible and you aren't adding them to the amount borrowed, most lenders offer low rate deals with a cash fee ............. always look at the total cost of borrowing not just the rate.

Dream Weaver

I don't think we had any charges last time, except £200 added for some fee or other which is fine by me (I was aware what the fee was back then, but can't remember now).

Don't pay the IFA anything.

NeilT

So, say you pay £10000 into your mortgage account and therefore reduce the monthly payments by say £100.

Each month you're £100 better off for it.

So, do you a) reinvest that £100 into something else b) waste it / spend it on daily living exp, eating out more etc c) keep the payments the same therefore paying £100 more towards your mortgage each month?

Bakerman

I wouldn't aim to reduce the monthly premium, just the term.

logiclee

I was able to pay £30k off the motgage early last year.

The answer is C.

Cheers
Lee

Jimpreza

Any amount of ******* lassoing on this thread. I don't pay any extra off cause I am skint.

fast bloke

I pay the minimum amount, and fabricate accounts to borrow far more than I can afford so I can remortgage and buy an X5. When I die there won't be an IHT problem.




p.s. - If anyone wants sound mortgage advice, PM me - I'm qualified you know