Reducing Payments for 5 Year Fix?

moneysaver_2010

Hello,

I am currently in year 3 of a 5 year fix. paying just over 700 pounds a month.

I want to reduce this to 200 a month and remain on the same rate of 3.95%. I know this will result in a longer term.

How easy is this to do?

What reasons would be valid for a bank such as HSBC for me to do this?



I need to reduce payments as I have higher bills, a family wedding and job insecurity, I would like a peace of mind.

please can someone advise..

thanks

Thrugelmir

Reduction of £700 to £200 no chance.

Unlikely that £200 covers your monthly interest.

dunstonh

What reasons would be valid for a bank such as HSBC for me to do this?

Pretty much none as you are asking to break your contract. They will probably allow you to break the contract and extend the mortgage by paying your ERC and buying one of their current deals.

Abatement

Some lenders (don't know about hsbc) let you reduce payments if you have overpaid in the past. However, I'm guessing that's not the case, or you would probably have mentioned it.

jamesd

Better to use a 0% for purchases credit card as a temporary way to cover the bills. If your finances fall apart the card debt will be unsecured and won't risk you losing your home.

If you have job insecurity due to possible redundancy but have not yet been formally notified, you could consider taking out unemployment insurance.

opinions4u

moneysaver_2010 wrote: »

Hello,

I am currently in year 3 of a 5 year fix. paying just over 700 pounds a month.

I want to reduce this to 200 a month and remain on the same rate of 3.95%. I know this will result in a longer term.

How easy is this to do?

As you provided no balance or term I don't know.

What reasons would be valid for a bank such as HSBC for me to do this?

Ask them.

I need to reduce payments as I have higher bills, a family wedding and job insecurity, I would like a peace of mind.

But don't expect them to help out because the exhaust has fallen off your car, you want to contribute to a lavish wedding or you might lose your job.

Your mortgage is the roof over your head. It is, along with food, the first bill you should prioritise.

Asking them to consider extending your term may be the solution that you're after. But they don't have to agree to this.

Eellogofusciouhipoppokunu

I would post an SOA on the debt free wannabe board to see if there are cutbacks you can make in your spending. If you want to build up an emergency cash reserve then you could try going Interest Only on your mortgage, but only if you save the repayment money rather than using it to fund your lifestyle.

_Andy_

If you're with HSBC and want to extend the term, this will be treated as a new application. How you've arrived at £200 month though is beyond me.

Don't really think this is going to happen to be honest.

SternMusik

moneysaver_2010 wrote: »

Hello,

I am currently in year 3 of a 5 year fix. paying just over 700 pounds a month.

I want to reduce this to 200 a month and remain on the same rate of 3.95%. I know this will result in a longer term.

From the figures you quote it seems that the original loan term was 8 years. Is there any specific reason why you took out a repayment mortgage over such a short term? If your age doesn't prevent you from taking it out over a longer term you can ask you lender to increase the term, but they have no obligation to do this.

£200 would roughly equal the interest component of the mortgage payment at the beginning of the term. I have no idea what the relevance of that is though.

You might be able to remortgage elsewhere for a longer term (given that age and affordability are not an issue) and thus reduce your monthly payments, but presumably you would have to pay early repayment charges.

Finally, you could aks you lender to switch you to interest only for a while, but I imagine this might damage your credit rating, and again they don't have to agree to this.

Eellogofusciouhipoppokunu

SternMusik wrote: »

Finally, you could aks you lender to switch you to interest only for a while, but I imagine this might damage your credit rating, and again they don't have to agree to this.

Why would switching to IO damage someone's credit rating?

_Andy_

Eellogofusciouhipoppokunu wrote: »

Why would switching to IO damage someone's credit rating?

Because if HSBC allow them to do it temporarily (6 months for example) they record it as missed.

Assuming the OP has no repayment vehicle HSBC won't allow an ongoing switch.

Currently we have no information from the OP in terms of loan amount, LTV etc