is reducing the term a remortgage?

turtlemoose

I've had a read around and have learned that when I come to the end of my fix, I will be asking my lender to move to a customer retention product and NOT remortgaging.

However what I can't work out is, if I at that point ask to reduce my term by around 7 years (depending on rates) is that then considered a remortgage? Or is it dependent on the lender? (Nationwide and Natwest at the mo if that's relevant,will be 23 left on both at the time the fixes end).

Thrugelmir

If you request a contractual change to the term. Then the lender is now obliged to check affordability. However if you simply overpay thereby shortening your term naturally. Then there's no complexities.

kingstreet

As there is no change to the mortgage deed when increasing or reducing the term, it still isn't a remortgage as you are not replacing a mortgage from one lender with a new mortgage from another.

However, you will be subject to new affordability checks before a reduction in term can be actioned. You may find it easier to make voluntary overpayments to reduce the term instead, if you are disciplined enough to stick to the plan.

turtlemoose

I wanted to reduce the term AND make overpayments

As I'm on a 4.89% fix with Natwest at the moment, any new deal is almost certain to be cheaper. I intended to reduce the term until the payments were the same as now (ie £600 pm). Then I can overpay up to 10% of the loan amount on top. Effectively giving me the opportunity, if I have the money (working on that bit!), to make more OPs per calendar year than if I *don't* reduce the term.

I guess at the moment while I'm not in a position to be making huge overpayments it doesn't matter too much. I'll see how my affordability is looking nearer the time

thanks for your help both

Thrugelmir

turtlemoose wrote: »

I wanted to reduce the term AND make overpayments

If you don't change the term. Then you'll allow yourself flexibility should the need arise financially.