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Remortgaging - keep term or extend 25yrs?
Jimmar
Posts: 50 Forumite
I've found I can remortgage to a lower rate thus reducing monthly outgoings, which is great.
But I have a question, I currently have about 15 years left on the term but if I remortgage to another 25 year term I would pay even less a month.
I'm running a savings account which pays fractionally more than the new rate so paying into this makes more sense than overpaying the mortgage and my final plan is to use the savings to pay off the whole lot well before the 15 (or 25) years are up.
Does it make financial sense to take the 25 year mortgage given that if my scheme works out I would be paying it all off before the extra cost comes into play?
I am pretty certain I have it correct but I feel it is too good to be true.
Am I missing something?
But I have a question, I currently have about 15 years left on the term but if I remortgage to another 25 year term I would pay even less a month.
I'm running a savings account which pays fractionally more than the new rate so paying into this makes more sense than overpaying the mortgage and my final plan is to use the savings to pay off the whole lot well before the 15 (or 25) years are up.
Does it make financial sense to take the 25 year mortgage given that if my scheme works out I would be paying it all off before the extra cost comes into play?
I am pretty certain I have it correct but I feel it is too good to be true.
Am I missing something?
0
Comments
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why not remortgage with low 2-3 year deals while the BOE rates are still low, rather than locking yourself in."It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0 -
Have you allowed for tax on the interest earned?0
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Lengthen your term and you will most certainly pay more overall.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, 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.0 -
If you can be disciplined enough to always put the difference away in your savings account and pay off the mortgage with the savings, then this should work, and will also mean that if your wages stopped for a while you would have more of a buffer.
If there is any chance that you would spend the money instead you'll be better off keeping the shorter mortgage term.0 -
25 years of disciplineI am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, 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.0 -
Yep, tax accounted for. For now at least. I'll be bunging it into ISA's so no tax on those earnings and if I can meet the 15K limit each year I should have enough savings to clear the remaining debt in about 4/5 years.
At least that's the plan.0 -
hopefully only 5 or 6 years of discipline Amnblog!0
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Personally I wouldn't base any long term decision on interest rates as they stand today. Make the most of todays low rates. As it's a one in a lifetime time opportunity to make oneself financially secure.0
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Thrugelmir wrote: »Personally I wouldn't base any long term decision on interest rates as they stand today. Make the most of todays low rates. As it's a one in a lifetime time opportunity to make oneself financially secure.
If rates go up, the OP can overpay.0 -
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