Remortgaging and reducing term

staffiecat

Hi there,
Can I ask for your thoughts on the following please.

Back in April my mortgage reverted to the std variable rate of 4.99%. At the time I thought I had 15% equity in the house but with falling house prices it was much lower - therefore I have stayed on this variable rate but have been overpaying each month. The fixed rate deals on offer back then were 5.99%.

I rang my mortgage company yesterday and they are now willing to offer me a 2 year fixed of 4.99%. (I would prefer longer fixed but nothing on offer unfortunately and I think my LTV is still too low to shop around).

Current o/s mortgage approx £133,000 over 22years. I am thinking about fixing in for the 2 years but reducing my term to 17 years and continuing to overpay (although probably only by £100 per month).

Does this make sense to remortgage in this way and can you see any potentiall issues with this ?

Many thanks

Niv

That is baically what I did. I dont 'overpay' as such. When I went to the bank to re-mortgage I said I can afford £x so make the term match the repayment I can afford.

The main problem I can think of with this is if your circumstances change then it is more complicated to sort than simply to stop overpayments. However I have made enquires and in my case if I were to change the term of the mortgage before the fixed term is up it would not be concidered a 're-mortgage' so no early redemption penalty would be applicable.

Thrugelmir

Stay on the product and term you currently are , and continue to overpay by as much as you can afford. This will progressively improve your LTV and remortgaging options.