Mortgage

Glenn231176

Hi i bought a new house 3 yrs ago and I was advice to take a 5yr deal I have been making overpayments, and  have 2 yrs left on my current mortgage deal, I have a 4k erc to pay to get out off this deal, I have looked at other deals and for 26 pounds more a month I can get 4 yrs knocked off my term, which is a big saving, it's not about reducing my monthly payments I want to reduce the term is more important to me, I want advice if this is worth doing my current mortgage is 147k if I add the 4k erc then I would have 151k left but reduce the yrs by 4 and the monthly payments would be £26 pound a month more which is not a problem for a new  2 Yr deal, is this something worth doing as I want to reduce yrs,? Can someone advice me on what is best
Thanks Glenn 

K_S

@glenn231176 Are you using up the max erc-free overpayment threshold (usually 10%) every year?

MovingForwards

Your mortgage term will naturally reduce because of making overpayments, there's no need to physically reduce the term with the lender.

MFWannabe

Glenn231176 said:

Hi i bought a new house 3 yrs ago and I was advice to take a 5yr deal I have been making overpayments, and  have 2 yrs left on my current mortgage deal, I have a 4k erc to pay to get out off this deal, I have looked at other deals and for 26 pounds more a month I can get 4 yrs knocked off my term, which is a big saving, it's not about reducing my monthly payments I want to reduce the term is more important to me, I want advice if this is worth doing my current mortgage is 147k if I add the 4k erc then I would have 151k left but reduce the yrs by 4 and the monthly payments would be £26 pound a month more which is not a problem for a new  2 Yr deal, is this something worth doing as I want to reduce yrs,? Can someone advice me on what is best
Thanks Glenn 

What’s your current interest rate? 

What would be the new interest rate! 

Glenn231176

MFWannabe said:

Glenn231176 said:

Hi i bought a new house 3 yrs ago and I was advice to take a 5yr deal I have been making overpayments, and  have 2 yrs left on my current mortgage deal, I have a 4k erc to pay to get out off this deal, I have looked at other deals and for 26 pounds more a month I can get 4 yrs knocked off my term, which is a big saving, it's not about reducing my monthly payments I want to reduce the term is more important to me, I want advice if this is worth doing my current mortgage is 147k if I add the 4k erc then I would have 151k left but reduce the yrs by 4 and the monthly payments would be £26 pound a month more which is not a problem for a new  2 Yr deal, is this something worth doing as I want to reduce yrs,? Can someone advice me on what is best
Thanks Glenn 

What’s your current interest rate? 

What would be the new interest rate! 

My current rate is 2.20
New deal is 1.79

Glenn231176

MovingForwards said:

Your mortgage term will naturally reduce because of making overpayments, there's no need to physically reduce the term with the lender.

So would you just see this out for 2 yrs, at min I got 22yrs left if I moved it would go to 18 yrs 

Glenn231176

K_S said:

@glenn231176 Are you using up the max erc-free overpayment threshold (usually 10%) every year?

Not the full  just when I save some money I paid 18k of in the first 3 yrs, just to try and get it down, I moved to a new house and I will be 67 when mortgage is done which I don't want so iam trying to reduce Yrs so hopefully by moving it every 2 Yr and making extra payments when I can I can get it done by time iam 60 ish 

MovingForwards

I would just leave it as it is and keep making the 10% overpayments each year.

My mortgage term is 23 years, but by making overpayments I will naturally bring the term down to 10 years. On paper it will always be 23 years until that final payment is made in just over 9 years.

K_S

Glenn231176 said:

K_S said:

@glenn231176 Are you using up the max erc-free overpayment threshold (usually 10%) every year?

Not the full  just when I save some money I paid 18k of in the first 3 yrs, just to try and get it down, I moved to a new house and I will be 67 when mortgage is done which I don't want so iam trying to reduce Yrs so hopefully by moving it every 2 Yr and making extra payments when I can I can get it done by time iam 60 ish 

@glenn231176 There's certainly no good reason I can see to pay a 4k ERC to escape the current deal.

From an interest saved point of view, overpaying has the exact same effect as shortening your term. Explained clearly here https://blog.moneysavingexpert.com/2014/10/dont-shorten-your-mortgage-term-if-you-can-overpay/

If you still are firm on a shorter term, just keep overpaying to the end of your current fix and reduce the term at remortgage time.

Glenn231176

MovingForwards said:

I would just leave it as it is and keep making the 10% overpayments each year.

My mortgage term is 23 years, but by making overpayments I will naturally bring the term down to 10 years. On paper it will always be 23 years until that final payment is made in just over 9 years.

If I leave it until my current deal runs out, when I go and renew it in  2 yrs, if I keep the payment same will that reduce the yrs? 

MovingForwards

Glenn231176 said:

MovingForwards said:

I would just leave it as it is and keep making the 10% overpayments each year.

My mortgage term is 23 years, but by making overpayments I will naturally bring the term down to 10 years. On paper it will always be 23 years until that final payment is made in just over 9 years.

If I leave it until my current deal runs out, when I go and renew it in  2 yrs, if I keep the payment same will that reduce the yrs? 

Yes, keep making your normal contractual payment, plus your overpayments and that will continue to naturally bring the term down.

Keep making your normal contractual payments, with no overpayments and that will keep it at the 18 years or whatever it is now.

Have you had a play with a mortgage overpayment calculator?