please help with re-mortgage decision

ValHaller

mo. wrote: »

say for example my payment is £471 per month and i have 25 years left,(after2 years) if i pay £600 per month every month,that will automaticaly reduce the years? is that what your saying?

exactly right - generally on a mortgage it is better just to overpay and let the term sort itself out (use a mortgage calculator to work out the payment for the term you want) and don't actually involve the lender in reducing the term. if you do agree a reduced term then you might not be able to change it back

mo._2-2

. if ive got 16 years left now,is it true that interest rates start droping,making it easier to clear the balance or doesnt the term matter?

mo._2-2

ValHaller wrote: »

exactly right - generally on a mortgage it is better just to overpay and let the term sort itself out (use a mortgage calculator to work out the payment for the term you want) and don't actually involve the lender in reducing the term. if you do agree a reduced term then you might not be able to change it back

ok, i thort if i sort a short term with lender that was better,

if ive got 16 years left now,is it true that interest rates start droping,making it easier to clear the balance or doesnt the term matter?

Ido need the money,at the same time is it wort moving at 16 years or should i stay put,i suppose in 2 years time i could reduce it to 14 years and be where i am today?

LAST QUESTION(SORRY FOR SO MANY) I was told by a lender 4 years ago when i went to pay£30k off my mortgage,that the best way was to reduce the term not the payment,was this the right advice?

getmore4less

mo. wrote: »

. if ive got 16 years left now,is it true that interest rates start droping,making it easier to clear the balance or doesnt the term matter?

Term is irrelivent it it is the payment that determines how quick you pay off a loan.

have a play with a calculator. i use
http://www.whatsthecost.com/mortgage.aspx

if you put in your repayment mortgages you can see how they work.

if you then set interest only and put in a payment you can see how the payment changes the time it takes to pay off a loan.
(an interest only with overpayments works the same as a repayment)

you can also see how much this extra £7k costs you long term.


it is not a good idea to buy a car using mortgage money unless you can overpay to cover the extra withing the lifetime of the car, if not you will still be paying of the debt when you need another car.

getmore4less

mo. wrote: »

LAST QUESTION(SORRY FOR SO MANY) I was told by a lender 4 years ago when i went to pay£30k off my mortgage,that the best way was to reduce the term not the payment,was this the right advice?

depends...

If there were overpayment penalties then this might have been better
if no penalties probably not.

it may have also been better to look at a remortgage since LTV would have improved potentialy getting a better rate.


Your current rate seems high allthough income multiple is not great.
with £87k on £120k is 73% ltv I would have though there was a better rate

if you paid off £30k only 4 years ago can you get overpayment back?

mo._2-2

getmore4less wrote: »

depends...

If there were overpayment penalties then this might have been better
if no penalties probably not.

it may have also been better to look at a remortgage since LTV would have improved potentialy getting a better rate.


Your current rate seems high allthough income multiple is not great.
with £87k on £120k is 73% ltv I would have though there was a better rate

if you paid off £30k only 4 years ago can you get overpayment back?

dont think so 4 years ago i had 29 years left i paid and got term down to 20 years

Morgage_Confused

it has been covered in some of the replies but basically dont voluntarily reduce the term. let it be (longer the better in some respects) and just overpay. by overpaying it is you who is determining the term and not the bank.

mo._2-2

Morgage_Confused wrote: »

it has been covered in some of the replies but basically dont voluntarily reduce the term. let it be (longer the better in some respects) and just overpay. by overpaying it is you who is determining the term and not the bank.

hi,spoke to santander today,they said the lower the term the more capital you pay,the higher the term more of your payment go's toward your interest.

getmore4less

mo. wrote: »

hi,spoke to santander today,they said the lower the term the more capital you pay,the higher the term more of your payment go's toward your interest.

That is very misleading,

allthough technicaly true if the payment is only based on the term.

lets do an example

first payment on £100k mortgage at 5% over

20 years payment £660 interest £417 capital £243
25 years payment £585 interest £417 capital £168

so the difference is the same as the reduction in payment.

TERM makes no difference it is the actual payment that matters

if you pay £660 on the 25 year term the interest £417 capital £243 the same as a 20 year term.