We are now £10k poorer...

[Sam]

The only advice I can give is when interest rates are so low you pay interest only and stick the main monies into a high interest rate bond or savings.
when interest rates go up fix it then switch back to capital repayment, then liquidate the savings bond and pay off the early payment accumulation.
That way you saved on interest plus you gained interest higher than just capital draw down.
Hope that makes sense for you chaps?

So just pay interest when low, then lock yourself into that rate when it looks like its all gonna go up and pay your mortgage as usual (interest+mortgage) for a couple of years then do it all over again?

[clipperjay]

The only advice I can give is when interest rates are so low you pay interest only and stick the main monies into a high interest rate bond or savings.
when interest rates go up fix it then switch back to capital repayment, then liquidate the savings bond and pay off the early payment accumulation.
That way you saved on interest plus you gained interest higher than just capital draw down.
Hope that makes sense for you chaps?

So just pay interest when low, then lock yourself into that rate when it looks like its all gonna go up and pay your mortgage as usual (interest+mortgage) for a couple of years then do it all over again?

Errr no the capital you are supposed to pay, you put to one side for reinvestment as the interest rates will be higher than interest only payment. That is the key here you can only do this type of restructuring if you are disciplined as you essentially (save+better interest) what you would have to pay back anyways!
1) £100 capital repayment per year (simple) (£10 capital +interest £5) £100 got reinvested by mortgage company right! £15 per month total.

2) £100 capital, interest only £5 goes to mortgage company (£10 fixed yield bond one year) earn't £20 of interest over that 12month period. So sticking that (£10 per month into high interest product) come month 13 interest rates go up FIXED now.
Liquidated bond got £120 pounds back payback more than original £100.00 capital repayment. £5 per month £12 banked total payback to mortgage company £17 at term £2 pounds you would have lost to mortgage company!
This only works in times of low underlining rates of interest as we all fix when its about to rise high.

Some dicks will spend some of that capital saved and end up being worse off!

Fundamentally as long as you make more than the current interest against your mortgage then you are always going to draw that mortgage down quicker once you pay off one lump at each term.
Things to watch out

Early payment fees: (Some mortgage companies charge you more money when you pay it off early because they loose the interest by shorting the payment terms)
Products that cost more than yield: (The investment is making less money than it cost to invest)
Products that tie you in over 12 months as you don't know when interest rates could suddenly rise?


 

[Sam]

The only advice I can give is when interest rates are so low you pay interest only and stick the main monies into a high interest rate bond or savings.
when interest rates go up fix it then switch back to capital repayment, then liquidate the savings bond and pay off the early payment accumulation.
That way you saved on interest plus you gained interest higher than just capital draw down.
Hope that makes sense for you chaps?

So just pay interest when low, then lock yourself into that rate when it looks like its all gonna go up and pay your mortgage as usual (interest+mortgage) for a couple of years then do it all over again?

Errr no the capital you are supposed to pay, you put to one side for reinvestment as the interest rates will be higher than interest only payment. That is the key here you can only do this type of restructuring if you are disciplined as you essentially (save+better interest) what you would have to pay back anyways!
£100 capital repayment per year (simple) (£10 capital +interest £5) £100 got reinvested by mortgage company right!

£100 capital, interest only £5 goes to mortgage company (£10 fixed yield bond one year) earn't £20 of interest over that 12month period. So sticking that (£10 per month into high interest product) come month 13 interest rates go up FIXED now.
Liquidated bond got £120 pounds back payback more than original £100.00 capital repayment.
This only works in times of low underlining rates of interest as we all fix when its about to rise high.

Some dicks will spend some of that capital saved and end up being worse off!

Fundamentally as long as you make more than the current interest against your mortgage then you are always going to draw that mortgage down quicker once you pay off one lump at each term.
Things to watch out

Early payment fees:
Products that cost more than yield:
Products that tie you in over 12 months as you don't know when interest rates could suddenly rise?


 

[clipperjay]

The only advice I can give is when interest rates are so low you pay interest only and stick the main monies into a high interest rate bond or savings.
when interest rates go up fix it then switch back to capital repayment, then liquidate the savings bond and pay off the early payment accumulation.
That way you saved on interest plus you gained interest higher than just capital draw down.
Hope that makes sense for you chaps?

So just pay interest when low, then lock yourself into that rate when it looks like its all gonna go up and pay your mortgage as usual (interest+mortgage) for a couple of years then do it all over again?

Errr no the capital you are supposed to pay, you put to one side for reinvestment as the interest rates will be higher than interest only payment. That is the key here you can only do this type of restructuring if you are disciplined as you essentially (save+better interest) what you would have to pay back anyways!
£100 capital repayment per year (simple) (£10 capital +interest £5) £100 got reinvested by mortgage company right!

£100 capital, interest only £5 goes to mortgage company (£10 fixed yield bond one year) earn't £20 of interest over that 12month period. So sticking that (£10 per month into high interest product) come month 13 interest rates go up FIXED now.
Liquidated bond got £120 pounds back payback more than original £100.00 capital repayment.
This only works in times of low underlining rates of interest as we all fix when its about to rise high.

Some dicks will spend some of that capital saved and end up being worse off!

Fundamentally as long as you make more than the current interest against your mortgage then you are always going to draw that mortgage down quicker once you pay off one lump at each term.
Things to watch out

Early payment fees:
Products that cost more than yield:
Products that tie you in over 12 months as you don't know when interest rates could suddenly rise?


 

Haaa that's one of my favorite shows from America!

What don't you understand?

[Sam]

The only advice I can give is when interest rates are so low you pay interest only and stick the main monies into a high interest rate bond or savings.
when interest rates go up fix it then switch back to capital repayment, then liquidate the savings bond and pay off the early payment accumulation.
That way you saved on interest plus you gained interest higher than just capital draw down.
Hope that makes sense for you chaps?

So just pay interest when low, then lock yourself into that rate when it looks like its all gonna go up and pay your mortgage as usual (interest+mortgage) for a couple of years then do it all over again?

Errr no the capital you are supposed to pay, you put to one side for reinvestment as the interest rates will be higher than interest only payment. That is the key here you can only do this type of restructuring if you are disciplined as you essentially (save+better interest) what you would have to pay back anyways!
£100 capital repayment per year (simple) (£10 capital +interest £5) £100 got reinvested by mortgage company right!

£100 capital, interest only £5 goes to mortgage company (£10 fixed yield bond one year) earn't £20 of interest over that 12month period. So sticking that (£10 per month into high interest product) come month 13 interest rates go up FIXED now.
Liquidated bond got £120 pounds back payback more than original £100.00 capital repayment.
This only works in times of low underlining rates of interest as we all fix when its about to rise high.

Some dicks will spend some of that capital saved and end up being worse off!

Fundamentally as long as you make more than the current interest against your mortgage then you are always going to draw that mortgage down quicker once you pay off one lump at each term.
Things to watch out

Early payment fees:
Products that cost more than yield:
Products that tie you in over 12 months as you don't know when interest rates could suddenly rise?


 

Haaa that's one of my favorite shows from America!

What don't you understand?

Pretty much all of it, I think i'm struggling with some of the terminology at the moment. Don't bother writing another response as you have been more than helpfull. Will get my head around the terms and figures and then work through it with my figures. Cheers Jay

[clipperjay]

Do you remember accounts from savings when interest got transferred to the mortgage account?
Same idea but you reinvest the capital repayment yourself so you pay more back that's it really mate!
You know when people say why rent all that money is wasted! Go for a mortgage instead? The way I view things is why pay all that capital payment to the bank when you can earn money of it!
Trick is to save and save and save after 4 years on a interest only the money you would have to have paid to them has earned you more than what you paid to the mortgage company  not helping Am'I LOL!

[Diamond Hell]

This



I can't be bothered with all of the fiddling about (and if I'm honest I probably lack the discipline too).  I'll take the fixed repayment, thanks.

I've actually taken a different approach to nailing our mortgage.  Took a 25yr one on repayment out in Bristol when we moved there.  Moved back to IOW five years later, had to take a new mortgage out (because mortgage companies after utter c*nts and their products are NOT portable) so took it out repayment over 20 years, to avoid just letting the term creep with the house move.  That hurts, but at least I know it'll be paid off in about 17 years now. Phew, eh? 

[clipperjay]

They should do mobile mortgages I've been in a similar situation where I could have gain 700% capital gain, but couldn't move a mortgage abroad. These issues I don't understand from UK rules is the Asset or house is worth XYZ and it should hold its value.
In my case I wanted to build from scratch so final build would have cost 200K, but asset worth 900K afterwards with over 35% rental yield, but they did get scared when it comes down to international property law, much like what when on in Spain and fancy condos being built at an alarming rate!

Thing is DH if you retire early long term its worth the hassle!
If you have to pay capital and interest every month anyways, why don't you pay it into a high interest account instead?

I did things the other way around working hard money was good, paid off my mortgage early, real early then remortgage a small amount and the irony is living in a bigger house means larger bills which makes life harder to maintain if life throws a spanner in the works and standard of living has gone down. I feel like the mid life guy who drives a Porsche who can't afford petrol to put in it 
 

[Sam]

Do you remember accounts from savings when interest got transferred to the mortgage account?
Same idea but you reinvest the capital repayment yourself so you pay more back that's it really mate!
You know when people say why rent all that money is wasted! Go for a mortgage instead? The way I view things is why pay all that capital payment to the bank when you can earn money of it!
Trick is to save and save and save after 4 years on a interest only the money you would have to have paid to them has earned you more than what you paid to the mortgage company  not helping Am'I LOL!

Got it! Pay Interest only whilst locked into a low rate and your capital is put in a high interest account and not touched. When you step out of the locked low rate pump all that capital in as capital payment and then wait for another low rate to get locked into. Is this correct? 

[clipperjay]

Do you remember accounts from savings when interest got transferred to the mortgage account?
Same idea but you reinvest the capital repayment yourself so you pay more back that's it really mate!
You know when people say why rent all that money is wasted! Go for a mortgage instead? The way I view things is why pay all that capital payment to the bank when you can earn money of it!
Trick is to save and save and save after 4 years on a interest only the money you would have to have paid to them has earned you more than what you paid to the mortgage company  not helping Am'I LOL!

Got it! Pay Interest only whilst locked into a low rate and your capital is put in a high interest account and not touched. When you step out of the locked low rate pump all that capital in as capital payment and then wait for another low rate to get locked into. Is this correct? 

Yes bingo!
If you are clever enough about it you can make money on capital as essentially leave interest only up to term, but that means you would have over and above the amount you owe the bank like your own mini endowment, but that means 20+ years of risk to financial products, unless its a very low risk product which would give you little or above the underling interest rate!
Most people forget after an interest only mortgage you still owe the bank the whole bloody lot unless you know a life insurance policy is going to kick in, but that's a morbid bit of advice for unique clients.