mortgage overpayments

[Fishfingerz]

Hi I only have 1 BTL property so i'm wondering what sort of strategy to play in the coming years . .

My mortgage is fixed at 4.8% for the next 4 years and i'm currently on an interest only. It occured to me the other day that I can afford to pay alot more than I currently am - so would it be wise for me to clear some of the mortgage before my fixed term expires, or would i be better off investing my surplus income in an ISA or high interest account ?

I rent the property out at £500 pcm and the interst only mortgage costs me £330 - would I be better off switching to repayment over the next 4 years (costing roughly £420) or simply making overpayments of £2-300 as and when I choose as my lender permits me to ? Am I right in thinking that I wont actually clear much with a repayment mortgage over 4 years as the majority of the debt in a repayment mortgage is cleared in the last 15 years ?

thanks in advance

Charlie

[jeffrey]

Hi I only have 1 BTL property so i'm wondering what sort of strategy to play in the coming years . .

My mortgage is fixed at 4.8% for the next 4 years and i'm currently on an interest only. It occured to me the other day that I can afford to pay alot more than I currently am - so would it be wise for me to clear some of the mortgage before my fixed term expires, or would i be better off investing my surplus income in an ISA or high interest account ?

I rent the property out at £500 pcm and the interst only mortgage costs me £330 - would I be better off switching to repayment over the next 4 years (costing roughly £420) or simply making overpayments of £2-300 as and when I choose as my lender permits me to ? Am I right in thinking that I wont actually clear much with a repayment mortgage over 4 years as the majority of the debt in a repayment mortgage is cleared in the last 15 years ?

thanks in advance

Charlie

Where could you borrow at 4.8% nowadays?
If it was my choice, I would:
a. keep as much debt as possible at that rate;
b. keep the interest-only payment deal (i.e. not repayment switch and no over-paying either); and
c. invest the surplus cash: Building Society (rates of >6% available), or Premium Bonds, or something else profitable but not locked-in for years.

[Matt Churchill]

I'd have to say that i would be with Jeffrey on this point. As long as you don't put yourself into anything with tie-ins. Then when your fixed rate expires, you could always pay off a chunk of the mortgage then if you wanted to.

[stanley1]

4.8% is really good. keep with the current deal and put the suplus in a savings account, some can give you up to 6% so you will be getting an extra 1.2% on your money. when the 4 years is up, you can use up your savings to pay down the mortgage!

[mtajim]

That really is great Idea. I am going to use it in my next investment venture (http://www.universal-property-agents.com/). Thanks