Remortgage questions

calvr1ch

Hi all

Im hoping someone will be able to answer this. We are coming to the end of our 5 year deal with our current mortgage provider and I have been shopping around for other deals. Since our last remortgage it seems getting a new one is even harder. Our current mortgage deal comes to an end at the end of August and there will be 9 years left on it. I have been in touch with L&C but they have come back and said that for us to have a remortgage it would have to be over 20 years due to the new affordability rules even though I am better paid and have more free cash each month than I did 5 years ago.

Anyway we need a mortgage for £50,000. We currently have £42,000 left on our current mortgage but wanted to borrow more for improvements. Our house is valued at £135,000. Our current deal is 3.19% reverting to the SVR of 3.75% in September. I currently pay £441 per month which I know will go up in September.

The deal I have been offered is a five year deal over 20 years at 2.12% at a cost of £255 per month reverting to 3.99% after 5 years. I was told that I could overpay which would bring the length of time down. My question is if I overpaid every month by £230 (£485 in total) how many years in theory would I have left on my mortgage at the end of the 5 year deal.

It may sound silly but after paying the same amount for the past 16 years and having only 9 years left I didnt want to go backwards and increase the length of our mortgage.

If I have missed anything please ask.

Thanks in advance.

Rich

TamsinC

https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

amnblog

Sounds like the Barclays rate which would mean you can repay by 10% of the balance per year.

If you are borrowing about 20% more and pay 20% more at about £540, you will still be on track to finish in 9 years or thereabouts.

poppy10_2

calvr1ch wrote: »

Anyway we need a mortgage for £50,000. We currently have £42,000 left on our current mortgage but wanted to borrow more for improvements. Our house is valued at £135,000. Our current deal is 3.19% reverting to the SVR of 3.75% in September. I currently pay £441 per month which I know will go up in September.

The deal I have been offered is a five year deal over 20 years at 2.12% at a cost of £255 per month reverting to 3.99% after 5 years. I was told that I could overpay which would bring the length of time down. My question is if I overpaid every month by £230 (£485 in total) how many years in theory would I have left on my mortgage at the end of the 5 year deal.

The mortgage calculator above will give you the answer.
I plugged in your figures and it gives a balance after 5 years of £24,865 if you overpay by £230 a month, compared to a balance of £39,410 if you don't overpay. If you carried on overpaying at that the same level (and assuming interest rates didn't rise) then you would be on course to pay off the mortgage completely in further 4.5 years i.e. nine and a half years from now.

calvr1ch

Thanks everyone. Poppy10 thanks for working it out like that for me it is appreciated. It was just the answer I was looking for.