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    • katie4
    • By katie4 30th Nov 17, 1:11 PM
    • 135Posts
    • 38Thanks
    katie4
    lower mortgage term?
    • #1
    • 30th Nov 17, 1:11 PM
    lower mortgage term? 30th Nov 17 at 1:11 PM
    Hi
    We bought our first house 5 years ago and our fixed term is coming to an end (25 years)


    iv looked at the mortgage calculator and the remaining balance over 20 years is 285pm but over 15 years it is 360 - this is what we are currently paying per month now


    would it not make more send to go for the 15 years istead? getting it paid off quicker? interest is 2.33%


    thanks







    I am 30 and hoping to be mortage free by 40!
Page 1
    • Reue
    • By Reue 30th Nov 17, 1:28 PM
    • 545 Posts
    • 444 Thanks
    Reue
    • #2
    • 30th Nov 17, 1:28 PM
    • #2
    • 30th Nov 17, 1:28 PM
    Hi
    We bought our first house 5 years ago and our fixed term is coming to an end (25 years)


    iv looked at the mortgage calculator and the remaining balance over 20 years is 285pm but over 15 years it is 360 - this is what we are currently paying per month now


    would it not make more send to go for the 15 years istead? getting it paid off quicker? interest is 2.33%


    thanks







    I am 30 and hoping to be mortage free by 40!
    Originally posted by katie4
    Generally people advise that you keep the term the same and make overpayments instead. That way you can still pay it off earlier but also stop making the overpayments if you come into financial difficulty. If you shortern the term then you are stuck with the higher payments regardless of situation.
    • katie4
    • By katie4 30th Nov 17, 1:38 PM
    • 135 Posts
    • 38 Thanks
    katie4
    • #3
    • 30th Nov 17, 1:38 PM
    • #3
    • 30th Nov 17, 1:38 PM
    Generally people advise that you keep the term the same and make overpayments instead. That way you can still pay it off earlier but also stop making the overpayments if you come into financial difficulty. If you shortern the term then you are stuck with the higher payments regardless of situation.
    Originally posted by Reue
    Hi sorry how do you mean stuck with the payments? as in what situation? thanks
    • Reue
    • By Reue 30th Nov 17, 1:43 PM
    • 545 Posts
    • 444 Thanks
    Reue
    • #4
    • 30th Nov 17, 1:43 PM
    • #4
    • 30th Nov 17, 1:43 PM
    Hi sorry how do you mean stuck with the payments? as in what situation? thanks
    Originally posted by katie4
    So for example someone could either:

    1. 25 yr term, 500 per month mortgage plus 500 per month overpayment

    2. 15 yr term, 1000 per month mortage


    Both options would have the mortgage paid off in the same amount of time, however if they were made redundant with option 1 they could stop making the overpayments.. if they had gone for option 2 then they're forced to keep paying the full 1000 per month.

    Basically by not reducing the term you are giving yourself the flexibility should you need it in future.
    • katie4
    • By katie4 30th Nov 17, 1:48 PM
    • 135 Posts
    • 38 Thanks
    katie4
    • #5
    • 30th Nov 17, 1:48 PM
    • #5
    • 30th Nov 17, 1:48 PM
    So for example someone could either:

    1. 25 yr term, 500 per month mortgage plus 500 per month overpayment

    2. 15 yr term, 1000 per month mortage


    Both options would have the mortgage paid off in the same amount of time, however if they were made redundant with option 1 they could stop making the overpayments.. if they had gone for option 2 then they're forced to keep paying the full 1000 per month.

    Basically by not reducing the term you are giving yourself the flexibility should you need it in future.
    Originally posted by Reue


    Thanks for explaining that
    Both our jobs are secure and I can't really see that changing at all
    For 75 difference in monthly payments i think it would be fine as we're not in a position to overpay at the moment
    i did enquire about overpaying previously but was informed it would have to be 3x the monthly amount
    • Reue
    • By Reue 30th Nov 17, 1:50 PM
    • 545 Posts
    • 444 Thanks
    Reue
    • #6
    • 30th Nov 17, 1:50 PM
    • #6
    • 30th Nov 17, 1:50 PM
    Thanks for explaining that
    Both our jobs are secure and I can't really see that changing at all
    For 75 difference in monthly payments i think it would be fine as we're not in a position to overpay at the moment
    i did enquire about overpaying previously but was informed it would have to be 3x the monthly amount
    Originally posted by katie4
    You're coming to the end of your fixed term so I assume you'll be looking at other mortgage providers? All the major ones I've encountered allow you to make any amount of overpayment with some only limiting you to 10% of the outstanding balance per year.
    • katie4
    • By katie4 30th Nov 17, 1:53 PM
    • 135 Posts
    • 38 Thanks
    katie4
    • #7
    • 30th Nov 17, 1:53 PM
    • #7
    • 30th Nov 17, 1:53 PM
    You're coming to the end of your fixed term so I assume you'll be looking at other mortgage providers? All the major ones I've encountered allow you to make any amount of overpayment with some only limiting you to 10% of the outstanding balance per year.
    Originally posted by Reue
    We're looking at doing a rate switch with current provider (no credit checks involved in this)
    • spadoosh
    • By spadoosh 30th Nov 17, 1:56 PM
    • 5,145 Posts
    • 6,903 Thanks
    spadoosh
    • #8
    • 30th Nov 17, 1:56 PM
    • #8
    • 30th Nov 17, 1:56 PM
    It depends on your attitude to money.

    I shortened my term. Our employment is stable and we've made sure weve got buffers. The temptation to choose to buy something at a whim at the expense of the mortgage is, well, too tempting.

    You shouldnt have to overpay 3x the amount.
    Don't be angry!
    • katie4
    • By katie4 30th Nov 17, 2:01 PM
    • 135 Posts
    • 38 Thanks
    katie4
    • #9
    • 30th Nov 17, 2:01 PM
    • #9
    • 30th Nov 17, 2:01 PM
    Thanks iv found the email i received which says
    based on your current product deal you cannot overpay but you can make capital payments of up to 10%PA which is 3 times monthly payment
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