Barclays extending mortgage term

Newbie_John

If we would like to extend our mortgage term by additional 15 years (not because of affordability but because of tax savings) is there a quicker way rather than going through the entire remortgage process?

I can see in the app under "Mortgage Charter" that they allow that for 6 months and after that you can either reduce or keep - would this work quicker?

Also, in such case scenario would remortgaging with the same bank we've been for 7 years be any quicker than any other?

Hoenir

Newbie_John said:

If we would like to extend our mortgage term by additional 15 years (not because of affordability but because of tax savings) is there a quicker way rather than going through the entire remortgage process?

Extending the term is a contractual change. The lender can impose whatever reasonable conditons it wishes. Affordability is central to FCA mortgage regulation. No lender is going to leave it self open by not adhering to proper procedures. 

The Mortgage charter allows the mortgage to be switched to interest only for 6 months or the term to be extended for a period of 6 months. Should you wish to extend the mortgage term beyond the initial 6 months. Then the above still applies. There's no sidestepping affordability checks etc. 

saajan_12

What tax saving? If its a BTL mortgage and you're looking at the 20% tax relief, then remember you're still paying more interest net of tax. 

The mortgage term is only relevant if you actually reach it and don't remortgage at the end of each fixed term. If you go beyond the fixed term then you go onto a SVR which is usually more expensive so why not just address when you remortgage? 

born_again

Newbie_John said:

If we would like to extend our mortgage term by additional 15 years (not because of affordability but because of tax savings) is there a quicker way rather than going through the entire remortgage process?

I can see in the app under "Mortgage Charter" that they allow that for 6 months and after that you can either reduce or keep - would this work quicker?

Also, in such case scenario would remortgaging with the same bank we've been for 7 years be any quicker than any other?

Mortgage charter is more aimed at people who are struggling to meet their mortgage payments, due to cost of living.

https://www.gov.uk/government/publications/mortgage-charter/mortgage-charter

All lenders have agreed:

• Anyone worried about their mortgage repayments can contact their lender for help and guidance, without any impact on their credit file and we would encourage you to contact your bank who are there to help.
• Support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check[2].
• Lenders will provide well-timed information to help customers plan ahead should their current rate be due to end.
• Lenders will offer tailored support for anyone struggling and deploy highly trained staff to help customers. This could mean extending their term to reduce their payments, offering a switch to interest only payments, but also a range of other options like a temporary payment deferral or part interest-part repayment. The right option will depend on the customer’s circumstances.

[2] Applies to 97% of the mortgage market, where customers are up to date with payments and not seeking to borrow more or change their repayment type or term.

Newbie_John

Ok thanks, I honestly thought it would be easier -their data shows I've been able to afford 20 years, I can do a product transfer with one click, but to extend to 30 years (which is more affordable) I need to go through paper work again.

@saajan_12, not BTL, normal mortgage but it ends before I'm 59 and would like to extend it to max let's say 70 and pay it off in full when I'm 59. Cheaper from higher tax point of view.

saajan_12

Newbie_John said:

Ok thanks, I honestly thought it would be easier -their data shows I've been able to afford 20 years, I can do a product transfer with one click, but to extend to 30 years (which is more affordable) I need to go through paper work again.

@saajan_12, not BTL, normal mortgage but it ends before I'm 59 and would like to extend it to max let's say 70 and pay it off in full when I'm 59. Cheaper from higher tax point of view.

How? a normal residential mortgage funding your main home isn't usually part of your tax calculation. 

Wonka_2

saajan_12 said:

Newbie_John said:

Ok thanks, I honestly thought it would be easier -their data shows I've been able to afford 20 years, I can do a product transfer with one click, but to extend to 30 years (which is more affordable) I need to go through paper work again.

@saajan_12, not BTL, normal mortgage but it ends before I'm 59 and would like to extend it to max let's say 70 and pay it off in full when I'm 59. Cheaper from higher tax point of view.

How? a normal residential mortgage funding your main home isn't usually part of your tax calculation. 

Intrigued on the OP’s calculations for this ‘saving’ - unless they’re considering investing the monthly saving in pension and then drawing as TFLS to repay at 59 ? 

Newbie_John

Yep that one, as a higher tax rate payer I'd like to use my 25% pension to pay off the mortgage and have more money now.

Hoenir

Newbie_John said:

Yep that one, as a higher tax rate payer I'd like to use my 25% pension to pay off the mortgage and have more money now.

That was a fad back in the 80's. Investment returns failed to materialise as people expected. 

MWT

... also assumes that the 25% tax-free lump sum is still an option by then and that pension fund growth will be sufficient for that to make sense in terms of the impact on the future pension amount.

Hoenir

MWT said:

... also assumes that the 25% tax-free lump sum is still an option by then and that pension fund growth will be sufficient for that to make sense in terms of the impact on the future pension amount.

There's also the complete unknown of where the stock markets will be at the time of liquidation. Growth is just a number on a screen. Until it's tangible hard cash.