Re-Financing Existing Loan

exponential

T9090H wrote: »

Excellent, if your committed to the overpayments then the balance will reduce much quicker ����

Definitely.....:j

exponential

Money_Rollercoaster wrote: »

You don't mention what the settlement figure was for the existing loan. Brace yourself for a bit of a hit as even though you would have made payments of about £1600 (3 months at £538), you'll have incurred interest for 3 months and they'll likely add a further 58 days interest as part of the settlement figure. Your settlement figure is likely to be pretty close to your original £25,000 figure and might even be a smidge higher.


Also, you've paid for 3 months already. So, ideally you should be looking to reduce the term for the new loan, which would help save further interest. You should be able to refinance over 60 months instead of 72 months and pay the same amount monthly (+/-) as your existing loan. Keeping to 72 months instead of 60 months will cost you about £1,600 in interest ... so not small change at all.


I wouldn't advocate leaving yourself in danger of not being able to pay your loan payments, but I would suggest that if you can afford more than £538 a month you should put aside anything you can spare. You can always contact the loan provider to make an overpayment if you have a pot of savings you've accumulated, or (as I've done), settle the loan early when your savings pot / settlement figure cancel themselves out.

EDIT - oops, took so long to type this, you've applied anyway! Don't forget to make sure the lender knows you're making overpayments to save interest and not advance payments. Some lenders require you to advise them of the amounts you'll be paying in advance (if it's by standing order, for example)

The settlement figure is £24578 which I think is quite reasonable really. This is valid until the end of march so plenty of time to get it paid up.
I'm excited at the prospect of reduced payments and lower APR and do understand you saying to reduce my loan term but that only applies if you intend to just let the loan run it's course. (In my humble opinion that is).
I definitely will not be doing that and will overpay regularly hence the reason I took out the the longest term....Like I said, that's my logic anyway...:D

I mentioned on the phone the fact I am going to overpay but wasn't questioned on the amount or frequency. I think it was a good decision...I hope it was anyway...LOL

andy2003h

I recently switched a loan from Halifax to Nationwide, got a massively reduced %, but found the % droped a bit between 6 to 5 years, so went for 5 years.

one thing i did with paying off the old Halifax... (and it seemed to work) - I made an overpayment and left £200 left to pay.... i think it then calculated the settlement interest on the £200

Like i say, i think it worked , still not 100% sure but know its in a better place now than was...

exponential

andy2003h wrote: »

I recently switched a loan from Halifax to Nationwide, got a massively reduced %, but found the % droped a bit between 6 to 5 years, so went for 5 years.

one thing i did with paying off the old Halifax... (and it seemed to work) - I made an overpayment and left £200 left to pay.... i think it then calculated the settlement interest on the £200

Like i say, i think it worked , still not 100% sure but know its in a better place now than was...

Hi Andy.

That's a very ingenious way of doing things......I will do a search on this kind of thing to see if it would pay off....Like it..👍👍

T9090H

I'm sure settlement figures include the interest penalty of 58 days but don't take that as gospel.