Jurgen-Jm-Imports Posted March 6, 2007 Share Posted March 6, 2007 ok i have been thinking about this plan i have anybody on here that can correct me. 1.say mortgage is 200,000 and i pay interest only fixed for 3 years at the end of term i still have not payed anything off the house.(but i save £150 x 36 =£5400) so 2.if i payed capital and interest payments for 3 years how much capital will come off 200k ( i think not a lot) so my idea was go on interest only to save the monthly payment and after 3 years say pay 15k ( this 5k is the money saved by going interest only and 10k your own saving ) so now will my mortgage be 185k.. hence over 3 years i reckon i will still owe more if i went capital and interest over the scheme i just suggested obviously this will only work if you can save the money or invest to maybe pay of 10-20k does this make sense or is my head got too many petrol fumes lol Link to comment Share on other sites More sharing options...
Ian W Posted March 6, 2007 Share Posted March 6, 2007 if you pay capital and interest, your payments will obviously be a bit higher and generally speaking around 50% of that is capital and 50% is interest. just go onto an online mortgage calculator mate, it'll give you a rough idea of what your payments would be for such a mortgage if it were capital and interest. Link to comment Share on other sites More sharing options...
Whitesupraboy2 Posted March 6, 2007 Share Posted March 6, 2007 Im sure there will be some fee for a early repayment. There normally is depends on the place your with though. Link to comment Share on other sites More sharing options...
Jurgen-Jm-Imports Posted March 6, 2007 Author Share Posted March 6, 2007 there is no early repayment as its fixed 3 years at interest only Link to comment Share on other sites More sharing options...
tooquicktostop Posted March 6, 2007 Share Posted March 6, 2007 I had thought about doing this but was not confident I would actully pay the lump sums to the mortgate company when they were saved up, I tend to throw 'lump sums' at the car ! Link to comment Share on other sites More sharing options...
Jurgen-Jm-Imports Posted March 6, 2007 Author Share Posted March 6, 2007 so does my idea or way of thinking work or does capital and interest work better ? am sure on 3 years on capital and interest you will not have payed anything off the capital but the method i have stated might work- but am waiting to be corrected Link to comment Share on other sites More sharing options...
Jurgen-Jm-Imports Posted March 6, 2007 Author Share Posted March 6, 2007 I had thought about doing this but was not confident I would actully pay the lump sums to the mortgate company when they were saved up, I tend to throw 'lump sums' at the car ! lol so it could work better interest only Link to comment Share on other sites More sharing options...
Guest Nicholas Posted March 6, 2007 Share Posted March 6, 2007 I had thought about doing this but was not confident I would actully pay the lump sums to the mortgate company when they were saved up, I tend to throw 'lump sums' at the car ! Good idea but as tooquicktostop say's would you actually save up all that money of 3 years and pay a lump sum off? probably not Link to comment Share on other sites More sharing options...
grahamc Posted March 6, 2007 Share Posted March 6, 2007 its doesnt sound like a bad idea, my concern would be that I put the money into the car or something else.... Link to comment Share on other sites More sharing options...
Jurgen-Jm-Imports Posted March 6, 2007 Author Share Posted March 6, 2007 Good idea but as tooquicktostop say's would you actually save up all that money of 3 years and pay a lump sum off? probably not yep i would or invest in the business in more stock and make it work more Link to comment Share on other sites More sharing options...
Guest Nicholas Posted March 6, 2007 Share Posted March 6, 2007 yep i would or invest in the business in more stock and make it work more Do it then mate I have a capital and interest mortgage and over pay by £100 a month. I will save myself just short of 10,000 worth of interest by over paying. I guess it's a case of what works for you, I know I could never save the money over 3 years and make a big payment Link to comment Share on other sites More sharing options...
neil tt Posted March 6, 2007 Share Posted March 6, 2007 I think the sooner you pay of your mortage the better, so the bigger the payment you can make the better, and its quite amazing how much difference shortening the term of your mortage will make to the overall money you pay back. The mortage companies are there to take your money, so I think they have most angles covered. In all honesty would you pay lump sums off or keep thinking, if I done this with the money I -------- Link to comment Share on other sites More sharing options...
grahamc Posted March 6, 2007 Share Posted March 6, 2007 Wouldnt something like the ONE account be better?? You paying the extra amount every month, and they shorten the life of your mortgage... well thats my understanding, and a very simple one at that. Link to comment Share on other sites More sharing options...
tbourner Posted March 6, 2007 Share Posted March 6, 2007 Thank yourself lucky you have the choice!! I was forced to get a Northern Rock together loan or it was no house! If you look at the payments, the first 5 years pays pretty much nothing off the mortgage!!!! Link to comment Share on other sites More sharing options...
Faye Posted March 6, 2007 Share Posted March 6, 2007 I've got something like the one account with the Woolwich - however the interest rate on these accounts tends to be higher, and given the recent increases by the Bank of England we've taken a bit of a hit on our projected pay off date. Link to comment Share on other sites More sharing options...
Ark Posted March 6, 2007 Share Posted March 6, 2007 Wouldnt something like the ONE account be better?? You paying the extra amount every month, and they shorten the life of your mortgage... well thats my understanding, and a very simple one at that. Agreed, that type of account is great IF you are careful and disciplined with money. If you aren't, you're screwed. Link to comment Share on other sites More sharing options...
grahamc Posted March 6, 2007 Share Posted March 6, 2007 Thank yourself lucky you have the choice!! I was forced to get a Northern Rock together loan or it was no house! If you look at the payments, the first 5 years pays pretty much nothing off the mortgage!!!! What happened?? Reason I ask is that I am looking at mortgages now... Link to comment Share on other sites More sharing options...
tbourner Posted March 6, 2007 Share Posted March 6, 2007 What happened?? Reason I ask is that I am looking at mortgages now... Only because I had loans before, I already owed about 20k to Northern Rock so it was suggested that the together loan would work. They give you 95% property value as a secured loan, and Link to comment Share on other sites More sharing options...
Jurgen-Jm-Imports Posted March 6, 2007 Author Share Posted March 6, 2007 every 3 years i would just pay a lump sum 15k so after 12 years i would pay 60k then mortgage would be 140k from 200k the question is what would it be if i payed capital and interest for 12 years 180k ??? Link to comment Share on other sites More sharing options...
tbourner Posted March 6, 2007 Share Posted March 6, 2007 every 3 years i would just pay a lump sum 15k so after 12 years i would pay 60k then mortgage would be 140k from 200k the question is what would it be if i payed capital and interest for 12 years 180k ??? I think it goes down in most mortgages. So the first year you pay something silly like 2% off the mortgage, and by the final year you'd be paying 98% off the mortgage and 2% interest. So your plan would work, if you could stick to it and not spend the money, and only for approximately half the term until the repayment mortgage starts paying more. Then you've just got to work out the precise swapover time, because obviously if you pay half the mortgage amount with your plan, then swap to a repayment mortgage, it'll be a new mortgage and you'll be paying mostly interest again!!! It'll just be a lot shorter time to be paying it off. Confused? Link to comment Share on other sites More sharing options...
Jurgen-Jm-Imports Posted March 6, 2007 Author Share Posted March 6, 2007 only for approximately half the term until the repayment mortgage starts paying more. Then you've just got to work out the precise swapover time, because obviously if you pay half the mortgage amount with your plan, then swap to a repayment mortgage, it'll be a new mortgage and you'll be paying mostly interest again!!! It'll just be a lot shorter time to be paying it off. Confused? thats the bit i told my missus after so many years we would then go capital and interest Link to comment Share on other sites More sharing options...
Supragal Posted March 6, 2007 Share Posted March 6, 2007 yeah to start with you pretty much pay just the interest only, at the end it's more capital. If you can do that, and maybe overpay too if you have any spare each month they great. 3 years sounds like no time at all but actually it is. Link to comment Share on other sites More sharing options...
chilli Posted March 6, 2007 Share Posted March 6, 2007 sounds like you want to exactly what I have set up? I pay interest only on the mortgage loan I pay a set amount (adjustable) in an ISA (tax benifits) this plan is very flexible and at any time I could cash it in etc return on an ISA is better than the rates from a repayment mortgage + you get flexibility... Link to comment Share on other sites More sharing options...
Jurgen-Jm-Imports Posted March 6, 2007 Author Share Posted March 6, 2007 sounds like you want to exactly what I have set up? I pay interest only on the mortgage loan I pay a set amount (adjustable) in an ISA (tax benifits) this plan is very flexible and at any time I could cash it in etc return on an ISA is better than the rates from a repayment mortgage + you get flexibility... so its a good idea as my only worry is when u borrow 200k do you still owe interest on that 200k if its interest only ?? Link to comment Share on other sites More sharing options...
chilli Posted March 6, 2007 Share Posted March 6, 2007 you are borrowing a fixed amount, that amount stays still (i.e. it is not repayment). You have to pay interest on the loan to keep the loan amount... for me the flexibility was a big bonus + I can up the payments in the future if it is not on track. Like for like it made a cheaper mortgage per month + an isa set up in this way came with life insurance etc as well if the interest rates went crazy, I could put a freeze on paying into the isa, simiarly if I do well I can boost it up with additional payments. Works for me because the money in the isa really is cash I could take at any time (not that I probably would but who knows what the future may hold...), so it's a nice flexible setup Link to comment Share on other sites More sharing options...
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