Reduce payment not term

Jag1978

Hi All

Mortgage deal is coming to an end this month and I will have an estimated £122k left to pay over 23 years with Halifax. I’ve got about £40k that I want to put down with my new lender (not sure who yet) to reduce my mortgage down to £82k but I still want it to remain over 23 years. This will reduce my payments from £750 to about £500ish depending on the deal I go with.

Would this be possible or will the £40k only reduce the term rather than the monthly payments??

Regards

Jag

Martin_Moore

Jag,

If you move lenders you can choose what term and exact amount you want borrow.

You could reduce or extend the term, depending on your income and planned retirement age.

UK007BullDog

You can also do that with your present lender.

Gorgeous_George

It is generally best to pay as much as you can afford over as short a term as possible. If you want an 18 year mortgage, ask for one. The normal 25 year is just a convenient number that most people choose.

GG

snarffie

Jag1978 wrote: »

I’ve got about £40k that I want to put down with my new lender (not sure who yet) to reduce my mortgage down to £82k

If your 40k savings was in tax-free ISAs, you might be better off, not paying it into your mortgage.

eg. 40k savings @6.5% is better than saving, say 5.6% by contributing to your mortgage.

I'm no expert, but that's how I see it.

I've got some decent savings in ISAs, and actually decided to extend my mortgage, and 'overpay' into my ISA until the £3600 limit is full each year before overpaying the mortgage. I'm earning 1% more by keeping my ISA, against overpaying only, and at the end of the mortgage term, I should have accumulated 3600 per year(+interest) in tax-free ISAs.

dimbo61

hi jag 1978 have you thought about offset mortgages ( first direct and YBS )
you could offset the £40k against your £122k mortgage on a net payment and therefore reduce your payments.
BUT why reduce your mortgage payment when you have been paying this amount for at least the last 2/3 years ? why not try to pay off the mortgage
as quickly as possible and therefore save thousands in interest and have
the mortgage gone long before you retire !!!
you can only save £3,000 this tax year up to 31march and £3600 from april
in ISA,s but if you get a better rate ( 6.5 % ) than you pay on your new mortgage deal so much the better . THINK CAREFULLY and GOOD LUCK

Jag1978

For the last two years I’ve had additional funds to help with my mortgage which I wont have any more. That was the reason why I was thinking of reducing my payment rather than the term.. As have £40k to put down, I may be in a similar position in a couple of years as I believe my folks will pay large portion if not all my mortgage off for me if their finances work out, then I will just pay them minus the interest!! So in a couple of years I’ll make some serious adjustments to the mortgage, really looking for something short term.

Regards

Jag