Fixed deal ending

2 Posts
Hello all, I’m new on here today. I’ve recently paid off all my debts and my thoughts are turning to my mortgage.
In Dec 2010 I took out a 30 year capital repayment mortgage for £116,450 to buy a house which cost £137,000.
I’m currently on a 2 year fixed rate deal which ends in Dec this year. The monthly payments are £577.06 and the APR is 4.29%.
At the moment I owe ~£108,000 and have 26 years left. The current value of the house is £135,000 i.e. 80% LTV.
I’m in the fortunate position of currently being able to overpay my mortgage by £500/month (this is the maximum allowed on my mortgage without penalties) which I have been doing for the last few months. I’m trying to get my LTV down so that I can get a lower interest rate when my fixed deal ends.
The LTV will hopefully be <75% when my deal ends. However, if I get a lower interest rate, the monthly repayments will fall. Given that the maximum overpayment is £500, this will stop me from paying off as much as I want to every month. So I’m wondering, when I switch deals, can I reduce the term of the mortgage (say to 21 years), so that the payments stay around the same and I can still pay off a total of ~£1077/month?
So my question is, can I (and should I) reduce the term of the mortgage when my deal ends? Or am I missing something? Is there a more effective way to use the spare £500/month?
Sorry for all the info, hope it makes sense!
In Dec 2010 I took out a 30 year capital repayment mortgage for £116,450 to buy a house which cost £137,000.
I’m currently on a 2 year fixed rate deal which ends in Dec this year. The monthly payments are £577.06 and the APR is 4.29%.
At the moment I owe ~£108,000 and have 26 years left. The current value of the house is £135,000 i.e. 80% LTV.
I’m in the fortunate position of currently being able to overpay my mortgage by £500/month (this is the maximum allowed on my mortgage without penalties) which I have been doing for the last few months. I’m trying to get my LTV down so that I can get a lower interest rate when my fixed deal ends.
The LTV will hopefully be <75% when my deal ends. However, if I get a lower interest rate, the monthly repayments will fall. Given that the maximum overpayment is £500, this will stop me from paying off as much as I want to every month. So I’m wondering, when I switch deals, can I reduce the term of the mortgage (say to 21 years), so that the payments stay around the same and I can still pay off a total of ~£1077/month?
So my question is, can I (and should I) reduce the term of the mortgage when my deal ends? Or am I missing something? Is there a more effective way to use the spare £500/month?
Sorry for all the info, hope it makes sense!
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I will probably do the same, fix for 2 years max that way I can always extend the mortgage again later if I'm struggling.