SMF - Just Installed!

overpaying v switching to repayment

Started by wendycar127, January 25, 2016, 03:51:32 PM

Previous topic - Next topic

wendycar127

I have two BTL properties one on a repayment and the other on interest only which if I had a £ for every time ive said "i need to sort that mortgage" it would be paid by now and the end date is 2018 which is rapidly coming closer.
I don't know if anyone has ever been in this position I don't know whether to stick on my 2.75 rate and make regular over payments or move to a new fixed rate of 3.49 fixed for 7 years and skin myself every month on being due to the mortgage what i get in rent.
I wish i'd sorted this years ago!!!

Hippogriff

I only get repayment mortgages from the outset, so my advice would be repayment. Others will say overpaying gives you flexibility, but maybe this is not what you need right now? Self control is required to continue making the overpayments... if you had that, maybe?, you'd have sorted this years ago. That said, the interest rate is obviously lower... so if the repayments are the same as the repayment mortgage, you win.

theangrylandlord

I only get interest only mortgages from the outset, so my advice would be interest only. Others will say repayment gives you certainty, but maybe this is not what you need right now? You can set the overpayment from day 1 and "simulate" (sort of) the repayment mortgage if you have no self control.
You then retain the option to stop the overpayments when times are tough e.g. Extended void period.  Some mortgages even permit a payment holiday based on overpayments already made.

Just in case: is the current rate variable 2.75 % vs fixed 3.49% ? Then it also depends on if you have a view on future rates.
I only ask in case you are mixing fixed vs variable and repayment vs interest only.

Best of luck

wendycar127

Hi,

Yes current rate is standard variable at 2.75 the 7 year fixed is 3.49 with no fees. I too had thought about over payments which are more flexible possibly to flexible for someone with no self control. I have been very fortunate and had steady rental with very few voids for the past 8 years, if I had been overpaying all this time I would have paid a big chunk ......... hindsight as they say is a wonderful thing, its just that 2028 is fast approaching and I should really get off my ass and do something about it now.!!
thanks
wendy

Hippogriff