Remortgaging to a mortgage that allows large overpayments?

Rich1234a

Hi all,

Wonder if anyone can give me some advice please?

In August 15, when my fixed period ends, I'm looking to remortgage into something that allows large overpayments, as I want to pay my mortgage off quickly, thereby saving on the interest long term. I've read all of the articles on this site re: paying your mortgage off quicker and it does suit my personal and financial situation. I'm now deciding the best plan of action!

So, in August, I'm considering remortgaging to 2 or 3 year fix rate mortgage with a view to overpaying so that my mortgage will literally end when this period ends.

1) I'm aware that many mortgages only allow an overpayment of 10% of the previous years balance, is anyone aware of any which allow larger overpayments? I've had a quick look myself, but I'm going to have another look now, so if I find any I'll post back here.

2) as of August, I will have 19 years left on my mortgage, should I shorten the term based on the fact that I will be opting for a 2-3 year fixed rate?

3) I believe some mortgages penalise you with an early repayment charge, but from what I've seen this is generally during the initial fixed period? - not after this ends.

Any advice appreciated ,

Thanks and regards,
Rich

kingstreet

Choose a product with an offset facility, or a product without early repayment penalties. ERPs normally accompany the length of the product without any "overhang."

ie a three year fixed has penalties which last the three years.

Shorten the term if you feel you can cope with contractually higher monthly payments you can't avoid.

Rich1234a

Hi,

Thanks for the reply.

I've just spoken to the Halifax who said words to the effect ....

"if I have a two year fixed, during that period, I am limited to 10% of the previous years balance. However, when that two year period ends, I can overpay to any amount."

I'm just going to have a look to see if there are any that allow more during that period.

I take onboard what you're saying about shortening the term, I don't want to end up in a situation where I can't reduce my payments to a level that were manageable in the event I was in a financial crisis.

kingstreet

There are penalty-free products and products which allow larger overpayments, yes.

I suggest you speak to an independent mortgage broker. You could spend weeks on this and still not find the options which best suit your needs.

keeko

I've just spotted some what appear to be great offerings (5 year fixes for as low as 2.39% if you have enough deposit/equity) from First Direct (FD) which state you can make unlimited overpayments without charge (though there does seem to also be an early repayment charge).

You need to be a FD current account holder (and pay mortgage from the account) but I was thinking of switching my bank account after we've bought our house anyway, so I'm tempted to give them a call tomorrow.

I've seen other posts on here that state that FD have strict lending criteria and wondered what others had to say on the subject or experience with FD?

pwllbwdr

HSBC trackers allow unlimited overpayment without charges.

lee111s

pwllbwdr wrote: »

HSBC trackers allow unlimited overpayment without charges.

Most trackers do I believe. I'm in the process of moving to a Nationwide tracker which also have no overpayment limits.

LateStarter

keeko wrote: »

I've just spotted some what appear to be great offerings (5 year fixes for as low as 2.39% if you have enough deposit/equity) from First Direct (FD) which state you can make unlimited overpayments without charge (though there does seem to also be an early repayment charge).

...
I've seen other posts on here that state that FD have strict lending criteria and wondered what others had to say on the subject or experience with FD?

The early repayment is payable if you repay the entire mortgage within the fixed term period so may not be a big issue (if you win the lottery you could always leave £500 in until the term ends).

I did find FD to be quite strict on the repayment affordability criteria, but also easy to communicate with - if you're borderline they may not be for you.

HTH.

Rich1234a

Thanks for the great information, I'll check all of those out & work out the pros & cons (for my situation), then I'll post back, thanks!!