Changing Existing Mortgague - Impact on potential future mortgague?

pmartin86

Ok experts, i'll keep this short.


I've just dropped onto my banks SVR (3.94% - soon to be 4.19% after todays base rate rise) Things have changed significantly in LTV and financial position since the initial morgague was taken out. I'm now looking at a 2 years fix for 1.94% (no fee) on roughly 63k of borrowing on a house realisticly worth 140k. I currently have 20 years remaining but am looking to reduce this.


Assuming I pass affordability etc, I'm looking to change my term from 20 years to 12 and fix at 1.94% , would this be classed as a new mortgague or a retention? How would doing such a thing affect the possiblity of moving house in the next 1-2 years? (Im aware of the ERC, but would applying for "2" mortgagues within 12 months be an issue for example?)


Basicly, I just need to know what the best way to save money is while still keeping the option of moving house open.

getmore4less

£63,000 @1.94% 20y £317pm
£63,000 @1.94% 12y £491pm

The difference in payment is 3.3% of the balance, well within most ERC free overpayment limits of 10%

why no just take retention with overpayments rather than change term?

pmartin86

Hiya


Thanks for your input, it actualy occured to me last night that Overpayments would be the simplest way to so what I want while keeping my options open. Your right in the fact that I'm allowed 10% per annum overpayments.



I think my plan of action is as follows:

Stick to the 20 year term but fix for 2 years at 1.94%, then top the payment up to £500 a month with a standing order for the additional amount required (Roughly £187)



My unsdertanding is that this is effectivly the same as reducing to 12 years anyway?