reducing term

waterbaby

Hi,

I am not allowed to overpay my mortgage by as much as I would like to, and from reading posts here, I learnt that it was possible to reduce the term of the mortgage to allow higher payments.

So I phoned up First Active to enquire, but was told that I have to close the current mortgage, which is at 5.19% fixed, and take out another at a shorter term - but this would be with an arrangement fee of £500 and would also be at whatever rate the products are currently offered at - which would of course be higher than 5.19%.

I was under the impression that it was possible to change the term of an existing mortgage - did I misunderstand then?

wb

KTF

You can change the term (in either direction) when you come to remortgage. I dont know of any that will let you change the term mid flow without overpayment.

JoeK_3

You can reduce the term of a mortgage in anumber of ways.

1) Overpay on your mortgage (Subject to being no penalties)
2) Save for a lump sum and pay this off when there are no penalties
3) Remortgage continuously and use the saving to overpay and shorten the term.

I assume that your present mortgage does not allow you to overpay.

Use plan 2) in that case.

JoeK

waterbaby

Looks like I did misunderstand. Thanks for answering