Remortgaging 2 products into 1 - question!

mountainlioness

I've posted this on my diary but just wanted to ask separately for those that don't read my diary

We currently have 3 mortgages, as each time we've moved to a more expensive house, Nationwide have just set up the extra borrowing as a new mortgage (a total pain - 3 different rates)

2 of them (around £45k at 5.84% - our most expensive so where all the o/payments have been going and around £78k at 5.37%, the cheapest) are coming to the end of their tracker periods in the autumn and we were planning to remortgage the 2 together into one product.

My question is - how will the overpayments on one of the products affect the combined re-mortgage?

Will we have to match the new shorter term of the one we've been overpaying on to ensure we don't lose all the benefits in terms of interest saved? That will have implications for monthly payments,which given our plans for the year, isn't ideal...

Or am I being dim?! Should we just stick with the existing term of all three mortgages (all the same) and accept the lower capital amount due to the overpayments on one - then just start overpaying on the new product??

Any light that can be shed on this gratefully received!!!

ML

Little_Mama

Hi Mountainlioness,

I'm not clever enough in these things but I will have a similar situation to yours next year.

Have you asked this question on the Mortgage Board?

I had a remortgageish question to ask today and got my answer really quickly.

Good luck.

LM

JonnyBravo

mountainlioness wrote: »

Will we have to match the new shorter term of the one we've been overpaying on to ensure we don't lose all the benefits in terms of interest saved? That will have implications for monthly payments,which given our plans for the year, isn't ideal...

Or am I being dim?! Should we just stick with the existing term of all three mortgages (all the same) and accept the lower capital amount due to the overpayments on one - then just start overpaying on the new product??

Any light that can be shed on this gratefully received!!!

ML

Well you're kind of there. I'll try and explain this but can feel myself getting tongue tied as I try to think how to say what I mean..... :rolleyes:



Obviously if you re-mortgage to a longer term suddenly the interest you will pay over the life of that mortgage will increase, if you don't overpay again, but this is all somewhat arbitrary.


Picture if you remortgage to a 100 year mortgage (an example only)... here obviously the amount of interest you would pay would be huge..... so any overpayment would make a seemingly larger difference to what you'd "saved".

What is far more worthwhile is to work out how much interest you will actually pay using your options (including any overpayment strategy) and then go for the one that charges you least interest.

We all get hung up on "amount saved" cos its an easy thing to look at, measure etc but the key measure is actually how much interest you pay not save from a theoretical maximum.


So my advice? Re mortgage to the best deal you can and continue to overpay as much as you can / want to. It all saves you money.... (how much it "saves" you is arguable depending on term / rate / fees etc)