can/should I reduce mortgage term?

maud123

In June 2004 I had a new £82000 mortgage with Natwest over 25 years repayment method. Fixed rate deal which ends June 2008. I was paying £491.27 per month.

I was lucky enough to be able to pay a lump sum off and this was completed in September 2007. Natwest say I now owe £28500 over remaining 21 years and 9 months. Monthly payment is now £181.93 on the fixed rate until June 2008. After June I presume it will go to the Standard Variable Rate or Natwest will offer me a new deal??

Now I know that paying £28500 over nearly 22 years incurs a lot of interest. But I would really like a monthly mortgage payment of no more than £300.

Using a mortgage calculator using 6.5% I see that at £285.55 per month it would take 11 years to pay off??

When my fixed rate ends in June 2008 can I ask Natwest to shorten the term of my current mortgage to 11 years and adjust the payment accordingly for the interest rate they offer?? Or would I have to take out a whole new remortgage with Natwest or other lender?

Thanks in advance.

Redbedhead

You can get them to reduce the term to the length you want and they will be able to give you a quote at that time depending on the interest rate that will get it close to £300.

Your best bet if you want to spend exactly £300 per month is to reduce the term to the level calculated and then if the payment goes below the £300, just make an overpayment of the relevant amount, i.e. payment drops to £275, then do an overpayment of £25.

gemma.zhang

Can you ask to shorten the mortgage term when you make the lumpsum overpayment ? ... I guess you can still do that within the fixed term.

Have u tried to ask them ?

setmefree2

Hi

You should come and join us on the "Mortgage Free Forum", you sound like one of "Us":D We're are a fun bunch - though I warn you in advance that things can get a little heated over there and the moderators often have to come in and referee- close down threads, eliminate postings - we've even had one person chucked off the site. Oh the drama:p!