M2RTY
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Registered: 25th May 01
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I currently have an outstanding mortgage of £70500 on which I am paying 7.2% interest (was a very flexible deal, APR is a little high, but no fees to start, no fees to end, can overpay by anything and not incur charges etc). Works out £435 interest a month at the moment (only paid one month so far, this might differ slightly)
I have an ISA with HSBC, and get about £30 a month interest from it (with £5000 in it), would I be better off sticking the 5K in the Mortgage account to reduce the monthly interest by more then £30 a month? (Unsure APR on ISA but its about 5%??)
Any money I put in mortgage I can withdraw again, which is good.
Or leave it in ISA and just build up the interest? No good at money!
Thanks
[Edited on 06-10-2008 by M2RTY]
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RichR
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Registered: 17th Oct 01
Location: Waterhouses, Staffordshire
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50/50 split; keep £2500 back for anything which you may need the cash for, and put £2500 into the mortgage.
We had our 1 year account the other month and have paid off a measly amount compared to the nearly £9k that we had paid.
As soon as our renovations are finished I intend on overpaying (upto our overpayment limit) of £499 per month. I got bored and wrote a mortgage spreadsheet and if I do that from january I can pay my mortgage off in October 2018 assuming no changes to APR.
At the same time though, if you have a major problem with the house, car etc have you got seperate funds to sort it if you put the full £5k into the mortgage
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RichR
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Registered: 17th Oct 01
Location: Waterhouses, Staffordshire
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I think that works out at finishing 14 years early and saves us £58,125.35 in the long run.
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Leighton
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Registered: 21st Feb 01
Location: Liverpool
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pay off the mortgage and save the money on the interest there.
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M2RTY
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Registered: 25th May 01
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Lee - money can come straight back out of the mortgage fund at any time, but I can only put in ISA once a year (3k)
Basically I need to "fill up" my account with £75,000 in 25 years for the lot to be paid off, and also pay any interest occured each month
I will try and put 1k a month in once all the renovation work is done, but spending a lot on the house at the moment (may be 1k a month or more for the next 6 months)
Also, the rate 7.2 is not too good, as the house was valued at 75k and i borrowed 95% of that. Once finished, I will reassess the value, should be close to £120k, thus the APR will come down to 6.5% (based on % of value/mortgage amount) going on their current brackets, which should save me a few quid a month
If I put in 1k a month, thats overpaying by £550ish, unsure on how many years I will knock off but should be a fair few!!
Might move 1k over for now to see if it has any effect or not, then move a few more over once/if I can sell the BMW lol
thanks
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RichR
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Registered: 17th Oct 01
Location: Waterhouses, Staffordshire
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ISA allowance should be £3.6k now?
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M2RTY
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Registered: 25th May 01
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ok 3600, nowhere near what I intend on putting away tho (12k) tho 
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Robbo
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Registered: 6th Aug 02
Location: London
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Id agree with the above, keep some back but obviosuly from a purely financial sense, it is beeter to pay off as much of the mortgage a spossible
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M2RTY
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Registered: 25th May 01
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but the money I am paying off is just sitting in an account where I can take it directly back out again (thus interest will go up again) - unlike an ISA where I can only put 3600 in once a year
so could but 20k in for a year, then take 10 out for a few months, then put 15 back in etc and interest on the mortgage reflects the balance I owe
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Robbo
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Registered: 6th Aug 02
Location: London
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That doesnt make sense to me, you cant operate a mortgage like a bank account so there must be penalties or something for taking funds out again?
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RichR
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Registered: 17th Oct 01
Location: Waterhouses, Staffordshire
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Have you got a "one account" type mortgage?
[Edited on 07-10-2008 by LiVe LeE]
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M2RTY
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Registered: 25th May 01
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quote:
Originally posted by LiVe LeE
Have you got a "one account" type mortgage?
[Edited on 07-10-2008 by LiVe LeE]
yep, one account
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M2RTY
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Registered: 25th May 01
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quote:
Originally posted by Robbo
That doesnt make sense to me, you cant operate a mortgage like a bank account so there must be penalties or something for taking funds out again?
interest goes back up, simple as
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M2RTY
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Registered: 25th May 01
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Every day, any money in your One account doesn't just sit there; it automatically reduces your mortgage balance.
By reducing the balance, the amount of interest you pay reduces too. The knock on effect being your mortgage balance shrinks quicker.
This means you're overpaying your mortgage without actually having to find any extra money. And it will happen automatically; you won't have to lift a finger.
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M2RTY
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Registered: 25th May 01
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http://www.oneaccount.com/onev3/calculator/mortgage-shrinker-calculator.shtml
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Robbo
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Registered: 6th Aug 02
Location: London
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Oh its a One account, you should have said
fuck knows 
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M2RTY
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Registered: 25th May 01
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sorry thought i did lol, new to all this stuff lol
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corsa120
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Registered: 4th May 02
Location: Northamptonshire
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so you have an interest only mortgage??? personally i would switch to repayment, so you dont have to find the money at the end and keep saving into an isa each month, thats what id do
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M2RTY
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Registered: 25th May 01
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quote:
Originally posted by corsa120
so you have an interest only mortgage??? personally i would switch to repayment, so you dont have to find the money at the end and keep saving into an isa each month, thats what id do
no, i get charged interest only, based on what money I owe them. So if i put in £435 a month I would be paying interest only
as I am putting in £1000 a month, I am paying £565 off a month, plus £435 interest too.
I could pay the full lot off tomorrow if I wanted with extra penelties, or pay interest only for 35 years
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Kerry
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Registered: 5th Oct 01
Location: Norwich
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One Account is a good mortgage choice 
If used right the potential savings are massive 
I used to sell One Accounts several years ago
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