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Do repayments fall in this case?
WorriedBorrower
Posts: 17 Forumite
Sorry for the dummy question. I'm first-time buyer.
Normally, when you remortgage, do monthly repayment fall, considering the loan-to-value decreases due to steady property valuation and some small overpayments?
Is it worth to save hard in the first two years and make some 5% overpayment over the initial loan?
Cheers!
Normally, when you remortgage, do monthly repayment fall, considering the loan-to-value decreases due to steady property valuation and some small overpayments?
Is it worth to save hard in the first two years and make some 5% overpayment over the initial loan?
Cheers!
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Comments
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WorriedBorrower wrote: »Normally, when you remortgage, do monthly repayment fall, considering the loan-to-value decreases due to steady property valuation
No. Not unless your interest rate falls also.That's because your repayments are made up of part interest and part capital, and its calculated to be level over the mortgage term.WorriedBorrower wrote: »and some small overpayments?
Yes. However make sure they are applied to the mortgage rather than stuck in a pending account until the start of the new mortgage year. An offset account may be appropriate for you.
Yes. You could save thousands in interest by overpaying early.WorriedBorrower wrote: »Is it worth to save hard in the first two years and make some 5% overpayment over the initial loan?
Cheers!illegitimi non carborundum0 -
Your payments fall if;-WorriedBorrower wrote: »Sorry for the dummy question. I'm first-time buyer.
Normally, when you remortgage, do monthly repayment fall, considering the loan-to-value decreases due to steady property valuation and some small overpayments?
Is it worth to save hard in the first two years and make some 5% overpayment over the initial loan?
Cheers!
- you remortgage to a new lender, or ask your current lender for a new product, which is at a lower rate than your current one
- you make overpayments and ask your lender to reduce your normal monthly payment, rather than asking them to reduce the term.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
kingstreet wrote: »Your payments fall if;-
- you remortgage to a new lender, or ask your current lender for a new product, which is at a lower rate than your current one
- you make overpayments and ask your lender to reduce your normal monthly payment, rather than asking them to reduce the term.
To add: it will also fall if you ask to extend the term (other things remaining the same and assuming you are on a repayment mortgage already rather than interest-only).0 -
Good point. I never thought about asking to extend the term.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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