Correct advice from Natwest?

GreyGoat

Hi all,

I have done a bit of reading on the internet / these forums but I wanted to clarify as the advice the mortgage person i spoke to a while ago appears to be incorrect following what I have read on here / other sites.

That said the way Natwest explained it did sound 'better' and correct, just after a bit of advice from someone with a bit more knowledge than myself.

I have a 5 year fixed rate (taken out November 2016) at 3.19% for £427,500 over 35 years.The monthly repayments were approx £1690 PCM. Property is worth approx £650,000

After 1 year (approx) i decided to start overpaying (hence this post) and i now pay £3,000 PCM.

When i amended the DD i advised i wanted the term to reduce and not the monthly repayments (in line with what i read / understood to be best). I was advised amending the term on each payment ie making it shorter was a lengthy process and involved re applications (or something) and approval from the underwriters. Instead i was advised to let the over payments reduce the monthly repayment which would have exactly the same effect.

His reasoning was that every month my monthly due amount would reduce slightly and the additional over payments would go onto the capital to be repaid in effect having (almost) the same result as reducing the term. My mortgage would therefore be paid off in 16 years rather than another 34. He also explained if my circumstances changed i could simply cancel the over payment and revert to a lower payment that i originally had when i took the mortgage out.

I am thinking of raising my monthly payments by another £1000 (total £4k) but before i do (this is about the max i can do without hitting ERC) i wanted to make sure the advice is correct and this is the best way of doing things.

In 3 years time i will take out another 5 year FR on a similar interest rate (i know its a bit high) but nice and easy to get it paid off with no issues.

thanks in advance,

Thrugelmir

Amending the term is a contractual change. To protect themselves lenders will perform affordability checks.

The advice given is factually correct.

Bermonia

Not just factually correct but also very prudent - if term is altered your contractual repayments would also change, whilst you are happy and comfortable paying at this level now doesn’t mean that will always be the case, so a bit of flexibility helps - besides same end result.

GreyGoat

Thank you both same end result is exactly what i was after, appreciated.