Overpayments and Remortgaging

PawelK

Hello.

My five years fixed deal ends on 31st October and Nationwide already told me I'll be able to start talking to them about product move and fixing their rate (or looking for a new deal) as early as June. I have been overpaying for the last couple of years and from my original term of 30 years I now have 24 left (instead of the 25y6m if no overpayments). I am considering whether to ask them about extending lwhatever length it will remain to 25yrs (most likely will again fix for another five years)  as it would mean lower monthly repayments. That should give me more peace of mind over expected increase of living costs (energy bills, fuel, food, transport to work etc) and hopefully still enables me to keep overpaying but in general giving me more control over any disposable income left each month. Would the bank agree to that without any problem or do they usually increase the product fee or apply any other fees for that request or even try to convince you to stay on a shorter length? I read on here before, that whether you take out a mortgage for a shorter term or instead longer term but do monthly overpayments, it will save you the same amount of interest hence I'd prefer to go for the second option.

Another question I have is about remortgaging itself. If, for example, I am happy with their product offer in June, will I have to sign the deal then to secure and fix the rate for when my current mortgage ends? Or, if in the meanwhile a better offer becomes available, I can withdraw? Following on that, should I already start speaking to a broker to see if they can beat what Nationwide would offer me and also speak to my solicitors what are their costs if I was to switch the banks, so I can include that in my comparison? I guess if Nationwide offers me their best rate in June, they would give me 30 days or some similar time before I can decide or not?

Many thanks.

Thrugelmir

If you amend the contractual term it will be considered a new mortgage application and assessed accordingly. As you've been overpaying why not allow the lender to adjust the monthly amount you pay (i.e lower). Then continue to overpay as when you are able. 

If interest rates do indeed rise in the future. Extending the term may ultimately achieve very little. As it's reducing the capital balance owed that really matters and will determine the amount of interest that you pay.