Mortgage Advice - New Deal/Reduce Terms

fondue

Just gone up to SVR on Santander Mortgage, so payments gone up about £20 a month.

Want to reduce term and pay off, but not planning on doing that till Jan/Feb next year.

Is it worthwhile waiting till then to negotiate a new deal or get one now on same terms as current ( at reduced interest rate). Then reduce term, up payments in Jan/Feb?

Thanks

MortgageMamma

Hi Fondue


Whats holding you back until January do you have early repayment overhang or is it a personal matter?


There is no need to reduce the term of a mortgage unless you wanted to make unlimited overpayments. most mortgages offer you a 10% overpayment facility. You could use the mortgage overpayment calculator on this site to work out how much you can reduce your term by overpaying its really simple to use

fondue

Personal which will give me an option to reduce terms etc

fondue

I wasn't sure if its worth waiting and getting a new deal/new terms in Jan

MortgageMamma

There is only 4 months between now and Jan so (obviously this is dependent upon your mortgage amount and current rates) it is easy to think theres not much in it.


Realistically nobody knows what the rates are going to do between now and then but one thing I would highlight to you is if you choose to remortgage now make sure you can overpay by as much as you intend to, and if you intend to pay it off completely make sure the new mortgage product does not have early repayments charges.

Edit - additionally, if you intend to pay it off completely it most likely wouldn't be worthwhile but get a broker to do the maths for you just in case.

fondue

Sorry I didn't mean pay off in full. I currently have 5 yrs left. Wanted to reduce to 4 yrs, thus my payment would go up to cater for the 1 yr reduction.

Wasn't sure whether take the £20 month hit for 4/5 months or do something now but wouldn't be able to pay extra till Jan/Feb

SavingSteve

Just do it now on the 5 years, and overpay, that way you secure the lower rate, and the overpayments deal with the reduction in term.

Depends how much you;re talking, the above falls down if you're overpaying too much, as most lenders allow only 10% of the balance overpayment per year on a fixed rate deal

kingstreet

You will have to undergo full affordability checks and receive "advice" for a reduction in the term.

Voluntary overpayments achieve the same result without any of the aggro.

MortgageMamma

Overpayments are not mandatory they are voluntary so if you took a product now it wouldn't matter if you couldn't make overpayments until Jan/Feb, you could just phone up to change the account payment amount on your direct debit.


What you could find is if you wanted to change lender you may have a problem with the term being so short - some will not accept a 4 year term as they won't make enough money out of you.


I think the best thing you could do is speak to your lender, they will be able to advise you how to reduce the term of your mortgage most efficiently in keeping with their specific terms and conditions. Make sure you are very explicit with them about not wanting to incur early repayment charges as a result of overpaying.


hope that helps


MM

getmore4less

if you put up the details amount and rates and payments you are planning someone can crunch the numbers.

dropping from 5 to 4 years should be well within a 10% over payment allowance for probably 2 years so get the deal now and overpay upto the limit ASAP