Mortgage question
Discussion
I began the process of a mortgage at the start of the year. I'm a first time buyer. I finally took ownership of my house in July at a cost of 131k, borrowing 112,750.
Since then I've paid almost £2,000 in payments. But I've also accrued almost £1800 in interest and that will rise even more over the next week or so before this month's payment. My rate is 5.98% fixed rate for 2 years.
Question is: am I getting shafted with that rate? I feel like I'm treading water at the minute (in the admittedly very early stages of the mortgage). It seemed comparable at the time, but now it seems people in my position can get sub 5%? Has the market changed that much in the last few months? Or am I reading that wrongly?
Any advice appreciated.
Since then I've paid almost £2,000 in payments. But I've also accrued almost £1800 in interest and that will rise even more over the next week or so before this month's payment. My rate is 5.98% fixed rate for 2 years.
Question is: am I getting shafted with that rate? I feel like I'm treading water at the minute (in the admittedly very early stages of the mortgage). It seemed comparable at the time, but now it seems people in my position can get sub 5%? Has the market changed that much in the last few months? Or am I reading that wrongly?
Any advice appreciated.
My 2p worth would be to sit tight and don't worry about it - early on in a repayment mortgage a high percentage of the payments go to interest and only a small amount goes towards repaying the capital.
You may well be able to get a slightly better rate now but there's always that chance when you go fixed - things could be very different in 6 months
You may well be able to get a slightly better rate now but there's always that chance when you go fixed - things could be very different in 6 months
Firslty your in a fixed mortgage for two years the early redemption charges to get out and into a cheaper deal just wouldn't make financial sense especially as it's nit that much lower rate plus in reality it's not a large mortgage amount ie the fees would dwarf interest savings.
Secondly with a repayment mortgage of course in the early part of the life of a mortgage interest is a high % of the total monthly payment. Whereas at the end it will be very little interest.
This is why if you can over pay overpay asap your reducing the balance and that's a huge impact. Look online for overpayment calculators to see the impact but it's not that hard to reduce your 25 year down to 18years. From theredown takes a notable bit extra. Still well worth it mortgage free is always a massive goal as suddenly your burden to work is purely retirement funds cars holidays uni fees for kids or bigger house etc.
Secondly with a repayment mortgage of course in the early part of the life of a mortgage interest is a high % of the total monthly payment. Whereas at the end it will be very little interest.
This is why if you can over pay overpay asap your reducing the balance and that's a huge impact. Look online for overpayment calculators to see the impact but it's not that hard to reduce your 25 year down to 18years. From theredown takes a notable bit extra. Still well worth it mortgage free is always a massive goal as suddenly your burden to work is purely retirement funds cars holidays uni fees for kids or bigger house etc.
Just got my statement today.
Took mortgage out dec 09.
Borrowed £109k
About £1000 payed off after 9 months.
5.99% for 2 years.
£650/month - so that's about £5000 in interest!! If only it was interest free...
Just stick with it till the fixed term is up then see what is on offer then. I'm sure the early repayment fee and setup fee wouldn't make it worth while to change now.
Took mortgage out dec 09.
Borrowed £109k
About £1000 payed off after 9 months.
5.99% for 2 years.
£650/month - so that's about £5000 in interest!! If only it was interest free...
Just stick with it till the fixed term is up then see what is on offer then. I'm sure the early repayment fee and setup fee wouldn't make it worth while to change now.
Yeah, I wasn't seriously entertaining the idea of changing, but I thought the thoughts of you guys would be useful and they were, so thanks.
I'm a single person and only take home approx. 1600 a month after pension/student loan contributions, etc. So there's not a huge scope for overpaying. Though I know my mortgage will allow 500 per month overpayment without fee (with the potential to 'withdraw' any overpayment later down the line, I think).
Is it worth overpaying by, say, 150 a month if I can find that? With some careful budgeting (and perhaps a small parental contribution!) I might be able to find that.
I'm a single person and only take home approx. 1600 a month after pension/student loan contributions, etc. So there's not a huge scope for overpaying. Though I know my mortgage will allow 500 per month overpayment without fee (with the potential to 'withdraw' any overpayment later down the line, I think).
Is it worth overpaying by, say, 150 a month if I can find that? With some careful budgeting (and perhaps a small parental contribution!) I might be able to find that.
spud989 said:
Crikey, 150 extra will knock off 9 years, having me done in 18 rather than 27. That's unreal.
Though it seems 300 would only be down to 13 ish years.
Interesting!
Perhaps I might have to stick with this car for a while longer then, heh.
if you can take overpayments back for emergencies then what's the issue put in the max you can. Basically you shouldn't have a savings account as what you will earn in interest is far less than what you will be paying in mortgage hence put in all in. Reduce your term not your monthly repayment though. Though it seems 300 would only be down to 13 ish years.
Interesting!
Perhaps I might have to stick with this car for a while longer then, heh.
Gassing Station | Finance | Top of Page | What's New | My Stuff