Reduce payment

saywhat_3

This may be a stupid question.

If I pay a small lump sum to my fixed rate 3 year mortgage would the lender allow me to reduce the monthly payments?

beecher2

You'd have to check how much you're allowed to overpay - if you asked for the term to remain the same then your payments would decrease - use a mortgage calculator to work out how much they would reduce by.

vectistim

Whilst you are in your fixed rate there may be a penalty for early repayment, or they might allow 5-10% a year of early repayments whilst in the fixed period, you need to ask your lender.
As a rough rule of thumb if you paid off, say 5% of your outstanding loan and wanted to keep the final repayment date the same then your payments would fall by roughly 5% (they'll probably be some discrepancy due to changes in rates etc), but again, ask your lender.

saywhat_3

Thanks for the replies. I would be keeping the term the same but just want the repayments to go down slightly. Would be looking at paying about 10% of what is owed on the mortgage.

MrsManda

Check what your mortgage terms are with regards to overpaying. During my fixed rate period we can overpay by £500 a month without incurring charges. If we overpay £500 in a month our monthly payments automatically go down unless we request the term to be reduced.
We'd incur charges if we overpaid the mortage by 10% in one go.

saywhat_3

Thanks I'll have a look in my paperwork to see what it says regarding overpayments

ViolaLass

saywhat wrote: »

Thanks for the replies. I would be keeping the term the same but just want the repayments to go down slightly. Would be looking at paying about 10% of what is owed on the mortgage.

If the conditions on your mortgage are such that you can't overpay as you would like to, couldn't you use the lump sum to top up your monthly payment? e.g. your payment is £100/month but you would like it to be £90/month so you take £10 from your lump sum each month (made up figures but I hope they get the point across).

saywhat_3

If I cant make the one lump sum without charges then I will pay more each month just thought it would be easier to make one payment if possible