What Happens After Taking Money Out of Property?

User36750

We re-mortgaged a few months ago just before the hike in interest rates.
To help me understand and as nobody knows what will happen in a few years, I'd like to ignore the fact mortgages are now at about 5%.  Can the helpful ones just assume the mortgage rate will be 2% in the future.

We took some money out to help pay for IVF treatment, only a small amount - £4000 as we had some savings to go with it.
We chose to keep the same amount of years on the mortgage and pay slightly higher monthly payments than what we were doing.

When it comes to re-mortgaging, as we've sort of paid the money back through the higher payments, will our monthly rate drop?

Gycraig

Go on a mortgage interest calculator and whack in the amount you owe on a calculator and put in different amounts of years it will tell you what you will pay.

If you are keeping the same amount of years as now the payment will stay the same plus or minus interest rates 

Annisele

User36750 said:

When it comes to re-mortgaging, as we've sort of paid the money back through the higher payments, will our monthly rate drop?

I don't understand what you mean by this. Assuming you borrowed the £4k over the same number of years as the rest of your mortgage, you'll have paid very little of it back.

Let's say you owed £100k at the time you borrowed the extra £4k. Borrowing that extra money on the same terms as your existing loan would have made your payments go up by 4% (because £4k is 4% of £100k). The difference might have been higher or lower than that though - you might have had a different interest rate for the £4k of borrowing than for the rest of your loan.

When you come to remortgage, your new payment will depend on the interest rates at the time. If the interest rates don't change, then your payment won't change either.

JMA74

Mortgage rates wont be 2% in the future.  

And you arent paying extra off your £4k with your higher payments, you are paying the same off as you were on the lower payments but you are paying extra interest