Potential to get one over on the banks??

russxiii

Hi All,

I'm currently on FD SVR and looking to take advantage of the low interest rates and fix for 2 or 5 years.

Whilst I've been looking I've also been factoring in the fact i wish to overpay up to a value of 700 or 800 pounds (including my mortgage repayment).

I've been thinking about this tonight and don't know whether it would work or whether or not the banks have protection against this. I'm currently on a 30 year mortgage (27 years now).

So i am looking at spending 700 GBP a month

17 years @ 703 p/m (no overpayments as 700gbp is what im comfortable with)

40 years @ 333 p/m + 367 overpayment (367x60 months =£22020)

So my question is Is it possible for me to max my mortgage length at 40 years so i can over pay to the tune of £22020 over the term. Knowing that I'm going to be able to cut the length of my mortgage term significantly ?

Will the banks allow this? Or have they some T's&C's in place to prevent this?
Obviously the 40 year term i would pay considerably more over the WHOLE term. But i dont intend to be paying a mortgage that long.

Nebulous2

What would be the advantage of 40 years over 17?

In a 5 year fix at the same rate you'll have paid off the same amount of capital in 5 years if your payments are the same, regardless of whether it is an overpayment or a standard payment.

Some things to think about - can you get 40 years? Does the deal you're looking at allow overpayments, if so how much? If you take 17 years and rates go up during the 5 years could you afford the increase? On 40 years you would have the flexibility of stopping or reducing the overpayments.

None of that sounds like getting one over on the banks. Just different pros and cons for you.

Richey_

Any change in term would be subject to affordability checks, age and a full re application. Also whilst in the fix you are usually limited to 10% of the outstanding loan amount in overpayments without incurring fees which can be high.
Sounds like you are making this very complicated and would to really study the figures to see if it is worth it IMHO

dimbo61

I think the bank is having you over !
Why are you on the SVR ?
Do you auto renew your car/home insurance each year.
Pay your credit card late each month or throw £200 a week on the horses, betting machines, bingo !
Get on your lenders website and find the best deal they have for existing customers then if you want speak to a mortgage broker about better deals with other lenders taking into account remortgaging costs.
Consider offset mortgages as you want to overpay/build up savings

ACG

Most banks allow overpayments, some limit those overpayments and some do not and some do not allow them at all.

You need to check the lenders policy on the product you wish to apply for. With some banks it can vary from product to product, with others their policy is the same regardless of the product.

TheShape

I remortgaged in Nov 2015 changing my term from 8 years remaining to 30 years. Anything from 12 years+ would have been affordable. I decided to take the longest possible term because it reduced the 'minimum' mortgage payment as much as possible.

I'm on a lifetime tracker at base rate+1.49 so currently 1.74 with unlimited overpayments allowed and no ERC. I intended to overpay each month adding £331 to my monthly payment of £269(today's figure) which would have cleared the mortgage in just over 12 years. It gave the the peace of mind that if I lost my job/suffered reduced income I could revert to just paying £269 pm (even this would have reduced due to overpayments.

As it turns out, I'm now saving those overpayments into high paying current accounts/regular savers at 3%+. If my mortgage rate does increase to the point that it's higher than my savings rate, I've now got a pot of money equal to 20% (and growing every month)of my mortgage that I can overpay immediately. That would be without using any of my emergency fund equal to 6 months earnings.

getmore4less

in what way do you think you are doing the bank.


The real term is determined by the payments not the contractual term which just determines the contractual minimum payment.

any time there are no penalties you can pay off your mortgage for the redemption fees, if there are penalties you just reduce the amount as much as you can without penalty.

Jacobjohn

Yes you increase your time duration regarding to rule and regulation. You can talk with your mortgage and told increase the time period.