Hi all MSE'ers
Situation:
Joint mortgage, both 20% tax payers
£135,000 house, built 2010
5% deposit = £6,750
20% 0% builder loan (new build) = £27,000, repayable in full 01/03/2020
40 year 75% mortgage = £101,250 (current debt £99,600)
Current product, 37 year 3.99% SVR, unsure of any exit fees, £50 recurrent overpayment / month
Essentially, we are in the 'lucky' position where have half of the builder loan to be repaid saved in an ISA over the last 3 years, through saving £500 / month between us.
I am looking to remortgage and take on a 5 year fix (roughly 3.5% I've seen) at the moment, which should hopefully secure mortgage payments for the short term future without affecting the monthly payment, unless I decide to shorten the term.
My question however is whether I should use all, or part, of the ISA money, which currently earns 2.3% even with a bonus, to take between 5 - 10% chunk of the mortgage off (Halifax allows 10% overpayment in 12 month rolling period fee free). According to the MSE calculator a £8000 one off payment (8%) would shave off £35k+ of interest and around 11 years. However, this would obviously leave us £8k down on the savings to put towards repayment of the loan.
Future family commitments (we are both 25y/o) could well mean income is reduced in the next 5 years, so getting a new mortgage might prove tricky, as would continuing to save towards the loan. There are no immediate, or short term future, plans to sell up.
This would leave us in the position that we either need to add the builder loan on to a new mortgage product, increasing the LTV significantly (who knows what the mortgage market will be like next month, let alone 7 years) or sell up.
The logical step is to bung as much savings to the mortgage as possible, I know this, but what would others in this situation do?
Many Thanks
Situation:
Joint mortgage, both 20% tax payers
£135,000 house, built 2010
5% deposit = £6,750
20% 0% builder loan (new build) = £27,000, repayable in full 01/03/2020
40 year 75% mortgage = £101,250 (current debt £99,600)
Current product, 37 year 3.99% SVR, unsure of any exit fees, £50 recurrent overpayment / month
Essentially, we are in the 'lucky' position where have half of the builder loan to be repaid saved in an ISA over the last 3 years, through saving £500 / month between us.
I am looking to remortgage and take on a 5 year fix (roughly 3.5% I've seen) at the moment, which should hopefully secure mortgage payments for the short term future without affecting the monthly payment, unless I decide to shorten the term.
My question however is whether I should use all, or part, of the ISA money, which currently earns 2.3% even with a bonus, to take between 5 - 10% chunk of the mortgage off (Halifax allows 10% overpayment in 12 month rolling period fee free). According to the MSE calculator a £8000 one off payment (8%) would shave off £35k+ of interest and around 11 years. However, this would obviously leave us £8k down on the savings to put towards repayment of the loan.
Future family commitments (we are both 25y/o) could well mean income is reduced in the next 5 years, so getting a new mortgage might prove tricky, as would continuing to save towards the loan. There are no immediate, or short term future, plans to sell up.
This would leave us in the position that we either need to add the builder loan on to a new mortgage product, increasing the LTV significantly (who knows what the mortgage market will be like next month, let alone 7 years) or sell up.
The logical step is to bung as much savings to the mortgage as possible, I know this, but what would others in this situation do?
Many Thanks