Capital Repayment Question

fieldofdreams

Hi All,

I am looking to pay off a chunk of my mortgage via a capital repayment - I've already phoned the lender to check that no charges will apply and happily this is the case

I've been sent a mortage capital repayment form to return, which requires an option to be selected on how the payment is to be treated. I'm confused about the following two:

1. Reduce the term based on my current repayment
2. Reduce the balance outstanding

Can anyone advise what the difference between these two options are? Wont selecting the first option naturally reduce the balance outstanding? I basically want to choose the option that will result in paying off the mortage the quickest

If anyone could offer any thoughts on this I would be most grateful!

pixiepie99

Option 2 is the one you want.

dimbo61

What you want to make sure happens is that the monthly payment remains the same and you therefore pay off the mortgage early and save lots of interest!
So option 1 is the way to go

RosieTiger

If you take Option 2 they will change your payments to a lower one and keep the term the same - which may have complications for the amount you are allowed to overpay going forward.
If you want the best option for paying the mortgage quicker, then take Option 1, retaining current payments and have a shorter period left to completion. this is based on the assumption that you can presumably continue to afford the existing payment ?

CountingPenniesClaire

fieldofdreams wrote: »

Hi All,

Can anyone advise what the difference between these two options are? Wont selecting the first option naturally reduce the balance outstanding? I basically want to choose the option that will result in paying off the mortage the quickest. If anyone could offer any thoughts on this I would be most grateful!

Definitely option 1. Your monthly payments will stay the same but you will be that much closer to paying off the whole mortgage.

Good luck

waves117

Hi there

Firstly, Well done for using this money to reduce you mortgage.:T

I am currently overpaying my mortgage monthly. i chose option 1 every month for the above reasons given by dimbo61, RosieTiger, countingPenniesClare. if you can currently meet your mortgage repayment amount then it is definately option 1 that you want to choose becasue you will say money on the interest.

good luck:j