Reduce the term of your mortgage - and save!

ROCKIEDOG_2

I'm posting this as I didn't realise you could do this until my friend told me and my OH about it. They spoke to their mortgage provider and reduced the term of their mortgage, increasing the minimum amount and therefore increasing the amount they can over pay by. We spoke to our mortgage provider and for a £50 fee we have reduced our mortgage term from 20 years (18 left) to 8! Minimum payment has gone up to just under £1,700 and with 20% over payment we are paying just over £2,000 a month. We plugged the new numbers into our debt planner (available from swifton.com I think) and it calculated that we would pay the mortgage off in 6.5 years (with over payment). If we invest the payment after we pay it off then by the end of the original term we will have £400,000+ in savings!

Obviously not going to be possible for everyone but if you are debt free it may be worth investigating.

dimbo61

Very well done on clearing your debts and shortening the term of your mortgage to only 8 years but your mortgage payment is now £2000 a month with your overpayment !! could you not pay this overpayment into ISA,s
which hopefully will match or even beat your mortgage interest rate and
also give your an emergency fund if you have a problem at work, ill health,
big bill etc. build up your ISA,s and you could use this money to clear the
mortgage early if you want GOOD LUCK

kingkano

As dimbo says, although shortening it was easy, lengthening it later if your made redundant or something bad your way comes will not be so easy.... Make sure you have a good savings fund to cover you.

Having said that, congrats

ROCKIEDOG_2

We thought about putting the money into savings but we could only save 6k a year risk & tax free. Std savings would pay less after tax than mortgage. Whereas paying off the mortgage is risk free. To change it back is, supposedly, as simple as reducing it. Just a £50 fee to pay. That was one of the questions I made sure we asked

dimbo61

OK but if you put £6k in ISA,s( cash) now and £7.2k in april your joint allowance you
will have the 6 months worth of income for emergencies.!!!
then overpay to your heart,s content.
think of offset when this deal ends great place to build up your savings.