reducing term on fixed rate mortgage

lynne1307

Hi,
not sure of how to word this question but i'll give it a go!

I have 2 mortgages, just this year have dipped under the 100k (combined) with 11 years 7 months to go on a 25 year mortgage

payments total 1000 per month, with the Nationwide

Can I reduce the term on a fixed rate mortgage? can probably afford to pay 100 pounds extra per month so wondering how that would affect the term.

has anyone done this and could anyone give me some advice
thanks
Lynne

mambo69

Lynne

a fellow Nationwide member here, why not just overpay by £100 per month? This was then you do get the reduction you want, but can also stop paying at any time, without issue. I over pay £5 per week, not much, but will mean a payback time of 6 months earlier.

HarrowArrow

lynne1307 wrote: »

Hi,
not sure of how to word this question but i'll give it a go!

I have 2 mortgages, just this year have dipped under the 100k (combined) with 11 years 7 months to go on a 25 year mortgage

payments total 1000 per month, with the Nationwide

Can I reduce the term on a fixed rate mortgage? can probably afford to pay 100 pounds extra per month so wondering how that would affect the term.

has anyone done this and could anyone give me some advice
thanks
Lynne

Yes, you can reduce the term but for fixed rates only when you overpay by £500...every time I overpay by £500 on my Nationwide 5-year fix, the end-of-mortgage date comes forward a month !!!:D

When you overpay, you can choose to either:-

a) Reduce future payments
b) Reduce the term of mortgage

If you are registered online, you can select the above preference there, otherwise ring their CS and tell them what you'd prefer.

See: http://www.nationwide.co.uk/MortgageStatement/flexible_features.htm

NOTE, however, that you can only change the term if you pay £500 or more, and for fixed mortgages you can't overpay by more than £500, so you have to do exactly £500 !

KarenBB

OH also has a mortgage with nationwide and in answer to your question 'can you reduce the term on a fixed rate mortgage?', yes you can, nationwide send a form to you asking what you want the term reduced to, you send it back to them and they do - they don't charge a fee for this. If you had a 5 year fix I don't think you could reduce the term so it ended before the 5 years though.

If you've got an extra £100 I'd follow mambo69 advice and just overpay by £100 a month. The impact of this would be that the mortageg is paid off earlier but as mambo says you're not commited to that £100 a month and you could stop it at any time. Although you've not reduced the term paying £100 a month extra would mean that the mortgage is paid off sooner (reduced term). If you call nationwide they'd be able to tell you how much the quicker you'd pay it off if you paid extra.

OH reduced his terms couple of years ago but still overpays when possible. Last year we were stuck for cash and used the overpayments we'd made in the past to cover the mortgage for a couple of months. YOu can use the opverpayments to get a break from the mortgage when you need to and you can borrow the money back if you need to. Another advantage of overpaying rather than reducing the term formally.

As HA says if you overpay by £500 in a onth you can have your payments reduced from the next month or the term reduced. OH overpays by £499 so nothing changes.