Will lender agree to reducing mortgage term?

Abatement

As above, I'd quite like to reduce my mortgage term from 25 years to 20 or even 15 years. The reason I'd like to do this rather than just overpaying the equivalent amount is that the overpayments are capped at 10%/year, so by reducing the mortgage term (and increasing the monthly payments accordingly) i'd effectively be able to reduce the mortgage even quicker.

Are lenders generally open to this or is there no chance of changing the deal? I currently have about 4.5 years left to run on my tie-in period.

Lender is Accord, if it makes a difference.

Thanks...

HappyMJ

How much do you want to overpay. The 10% is usually calculated on the original amount borrowed so it is much higher than you think.

If you then saved the excess you can then clear the remainder off in 4.5 years when the tie-in finishes.

I would say there is little chance of changing the term now as they have had to purchase the money over 5 years as a bond and would not be wanting to sell the money back at a loss.

Abatement

Thanks HappyMJ - thought it was probably unlikely. I might give them a call anyway just in case.

As you say, there's more than one way to skin a cat, but I just liked the idea of having the extra headroom in my 10% overpayments, as it would give me a bit more flexibility. In an ideal world, I'd overpay by around 15% each year over the next couple of years (assuming finances work out as planned, and based on my current 25 year term), but obviously I could only do that if I shortened the term enough to cover the extra 5%.

Yorkie1

You could overpay the 10% allowed, put the other 5% into a regular or other saver, and then put the savings into the mortgage right at the end of the fixed period / when you remortgage. At that point you could reduce the term.

getmore4less

lenders are usualy OK with reducing the full term.

ask and check for charges and if you can extend again.


leaving it as is, max overpayments and savings give a bit more flexability.

reducung term could commit you to a higher payment

Abatement

Thanks all. I'll give Accord a call later in the week and see what they say...