Changing Mortgage Repayment Years on a Variable Rate

GreenSaints

Hi all,

Hope you are all well, even if the weather is a bit pants

I'll try and make this brief. We had a fix rate mortgage for 5 years over a 30 year term. After that fix ended, we stuff with our provider (Nationwide) on a variable rate, because at present it is only 2.5%

The plan was never to keep the mortgage on a 30 year term (we did initially to keep the payments lower while we got into the habit of being grown ups! ) but now because we are fortunate enough to be able to make some overpayment, we want to see what the new payments will be on a 25 or 20 year mortgage.

Can we do that if we are on a normal variable rate? If so, how do we do it?

Thank you in advance

opinions4u

Ring them, talk to them, ask if they charge a fee for changing the term.

If they do charge a fee, don't change the term. Just overpay anyway.

Do not do anything that loses you that BBR + 2.00% tracker deal you have.

This calculator can help you work out the numbers.

dshart

If there are no early repayment charges or penalties for overpaying then you may just be better overpaying by means of a standing order rather than remortgaging to a shorter term. That way as well if things do get tight in the future you can reduce the overpayments or even stop them altogether without penalty.

As the above poster said use the calculators to see the effect of overpayments.

getmore4less

as well as a good rate there are probably other features of the loan that you will loose if you remortgage.

just overpay as if you were on a shorter term.

plnty of calculators will tell you what the total payments need to be.

Yorkie1

If you overpay just make sure you ask the overpayments to reduce your term and not your monthly repayments

getmore4less

Yorkie1 wrote: »

If you overpay just make sure you ask the overpayments to reduce your term and not your monthly repayments

Best to leave the term and just increase the overpayment as the requested payment reduces.

more flexability should it be needed.

moneytalk_2

Hi
I am in the same situation as you!

I have a five year fixed mortgage with Nationwide and the rate is 5.18%:embarasse. This is a 25 year term mortgage and currently have 14 and half years left. My fixed rate mortgage is coming to an end on the 31st December and I will be transferred to their variable rate of 2%+BOE rate:j.

My plan is that from January is to pay my normal monthly payments and then I will overpay up to the same amount that I am currently paying now or even more. I have worked it out and even if the rate goes up to 5% in the next 12 months or so I would still slash this mortgage down by at least 5 years and save thousands of pounds. This will leave me with the flexibility of not doing any overpayments if I need the money, but should not happen as I have an emergency fund to keep us going for about 5 months in case I loose my job.

If this works, I should be mortgage free by the age of 45!:beer:

Yorkie1

getmore4less wrote: »

Best to leave the term and just increase the overpayment as the requested payment reduces.

more flexability should it be needed.

Haven't thought this one through - could you explain a bit more, please?

GreenSaints

Wow, thank you for all your responses. They are all really appreciated

When we make overpayments, they keep it in a pot until the end of the year and then use it against it. I think its in case you want to take a payment holiday. More likely is that they use it for other means

From your responses, I think we'll stick with overpaying so at least if the interest rates to back up to what we were paying on our 5.89% fix, we can afford it. We've stopped overpaying for a couple of months (I know, I know) because we're trying to get out of our overdraft (and the constant charges) but will get back on the repaying horse again

Thanks for the advice

dshart

GreenSaints wrote: »

Wow, thank you for all your responses. They are all really appreciated

When we make overpayments, they keep it in a pot until the end of the year and then use it against it. I think its in case you want to take a payment holiday. More likely is that they use it for other means

From your responses, I think we'll stick with overpaying so at least if the interest rates to back up to what we were paying on our 5.89% fix, we can afford it. We've stopped overpaying for a couple of months (I know, I know) because we're trying to get out of our overdraft (and the constant charges) but will get back on the repaying horse again

Thanks for the advice

I am not sure what you mean regarding them keeping your overpayments in a pot till the end of the year and then use it against it?

If the overpayments are not being applied immediately you make them, then you are losing out and you would be better off investing the overpayments elsewhere and only making a single overpayment just before year end.

You are right to clear overdrafts and other higher interest debts first before overpaying on the mortgage as you mortgage debt is likely to have to lowest interest rate.

GreenSaints

dshart wrote: »

I am not sure what you mean regarding them keeping your overpayments in a pot till the end of the year and then use it against it?

If the overpayments are not being applied immediately you make them, then you are losing out and you would be better off investing the overpayments elsewhere and only making a single overpayment just before year end.

You are right to clear overdrafts and other higher interest debts first before overpaying on the mortgage as you mortgage debt is likely to have to lowest interest rate.

I'm sure that Nationwide said that they keep the money in a pot in case you need a payment holiday. I think its because the interest is added yearly. I don't know really

I did have a look at the overpayment calculator. If only the interest rate stays like this for a few more years