Risk of reducing of mortgage amount avaiable to us

ice2cu

We currently have a mortgage balance of £83,000 but due to an inheritance we are about to reduce the balance to £30,000 and work to clear the rest as soon as possible.

We are not sure if it is a myth or not but, if you have a very low mortgage balance or no mortgage could this reduce the amount we can borrow in the future even if our incomes are the same? We want to clear the mortgage even with the ERC as we are on a rate of 5.63 % but at the same time we are thinking of moving and will need to borrow near our maximum if we do move next year and any reduction in the amount we are able to borrow could affect the property we want to buy as it likely to be near what the Building Society will lend us which is currently £250,000 .

We have a very good credit history and good emplyment history but will need to borrow a large sum to move to the property we want and cannot risk the amount being reduced. Is this a myth or not ?

Thanks for any advice

Wh05apk

Unlikely to make much if any difference, just ensure you are on the Voters roll, and I would suggest using a credit card, repaid in full each month just to keep your credit history ticking over.

getmore4less

Make sure you don't pay more penalties than you need to.

pay the penalty outside the loan, use overpayments without penalty

ice2cu

Thanks Its catch 22 on the penilties i can pay £500 a month with no penalty but over that £2400 but save on the 5.63%(tied in for another 18 months) on the amount payed off.

dimbo61

Can you check and see if its possible to reduce the term! I paid £50 to my lender and then had much bigger payments each month
As long as you dont clear the mortgage during the fixed rate period
You can only ring up and ask !

ice2cu

Thanks for that Its well worth a try and i will ring the Nationwide and see how i get on will ring

ice2cu

dimbo61 wrote: »

Can you check and see if its possible to reduce the term! I paid £50 to my lender and then had much bigger payments each month
As long as you dont clear the mortgage during the fixed rate period
You can only ring up and ask !

Great advice was told today £25 to reduce the term this means i will be able to pay £1000 more a month than the current normal payment am and then I can still pay another £500 on top each month (£1500 TOTAL). This mean no repayment fee of £2500. I know the caculations would still say its cheep to pay the penalty but this is flexable and if i move i can reduce the payments again and take out a new product or pay the fee but each payment reduces the intrest due by £84 a year.

Thanks for the great advice :rotfl:

dimbo61

Nice to hear that you have made the System work for you !
now the Nationwide staff are not allowed to give advice but as you have discovered you can reduce the term and therefore overpay big style and it saves you £84 each month when you overpay.
Each overpayment is saving you 5.63% TAX FREE and reducing your debt
Well Done and glad to have been of help

dimbo61

Reducing your mortgage debt will not effect how much you can borrow
Your LTV, deposit,credit history, current lending policy will dictate if you get a much bigger mortgage
Good Luck