Changing Fixed Rate Terms

RickMave

We are 3 years into a 5 year fixed rate, on a 12 year term, and whilst we have an exemplary record we are finding ourselves having to consider various options with regard to our finances.

I'm wondering whether it would be worthwhile us approaching our mortgage company to see whether we could re-arrange the mortgage so that the term ran an extra 5 years, making it a 17 year deal - with lower monthly payments from here to the end - everything else could stay the same. We would reasonably expect to pay an arrangement fee, but are fearful they might clobber us with the 5% early payment charge if they saw this as us closing the original deal and taking out a new one. If we were to be forced into that position we might as well consider taking our mortgage elsewhere where the rates are cheaper.

We can probably continue paying against the original deal, but it would help our situation if there were some flexibility. The mortgage does have a payment holiday option if we wanted to pursue that, but not sure how reliable that would be.

Gary123456790

Hi,

You can usually change the term (meaning a change in payments) at any point without coming out of your fixed deal, and you should certainly not have to pay the ERC. Some lenders charge a small fee (£25-£50) and some it is free.

I changed term a couple of times with Alliance and Leicester and they charged £25 each time, and i'm now with Santander and with them its free.

Regards,

Gary.

Thrugelmir

Give your lender a call. Extending the term makes sense if you are encountering financial difficulties. There's no reason for the ERC to be charged by doing this.

RickMave

Thanks Gary. I avoided naming the mortgage company, but ours is also a Santander (ex-A&L) mortgage. We have had zero problems paying for anything at any time, but inflation is kicking us.