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  • FIRST POST
    • katie4
    • By katie4 12th Mar 18, 11:47 AM
    • 136Posts
    • 39Thanks
    katie4
    Rate Switch - Affordability checks?
    • #1
    • 12th Mar 18, 11:47 AM
    Rate Switch - Affordability checks? 12th Mar 18 at 11:47 AM
    Our fixed term is coming to an end and we are going to be staying with our current provider but would like to reduce the term, would an affordability check be needed for this?

Page 1
    • Spangled
    • By Spangled 12th Mar 18, 1:54 PM
    • 185 Posts
    • 79 Thanks
    Spangled
    • #2
    • 12th Mar 18, 1:54 PM
    • #2
    • 12th Mar 18, 1:54 PM
    I *think* a reduction in term would trigger an affordability check. But check with a broker and/or your current lender.

    But could you not stick to your current term and just overpay to the level of the payments due on the shorter term? That way you are only contractually obliged to meet the lower payments (useful if cashflow becomes tight). It requires you to be disciplined to make those overpayments though.

    Of course, it does also depend on exactly how many years you are looking to shorten your term by and the limits on how much you can overpay by each month.
    • katie4
    • By katie4 12th Mar 18, 1:57 PM
    • 136 Posts
    • 39 Thanks
    katie4
    • #3
    • 12th Mar 18, 1:57 PM
    • #3
    • 12th Mar 18, 1:57 PM
    I *think* a reduction in term would trigger an affordability check. But check with a broker and/or your current lender.

    But could you not stick to your current term and just overpay to the level of the payments due on the shorter term? That way you are only contractually obliged to meet the lower payments (useful if cashflow becomes tight). It requires you to be disciplined to make those overpayments though.

    Of course, it does also depend on exactly how many years you are looking to shorten your term by and the limits on how much you can overpay by each month.
    Originally posted by Spangled
    Thanks we are not able to overpay (its in their t&cs - yes i know it is unusual but we have checked and double checked and this is the case)


    our monthly payments would stay roughly the same as what they are now which is good and we would be looking to reduce it by 5 years

    • Thrugelmir
    • By Thrugelmir 12th Mar 18, 2:47 PM
    • 58,515 Posts
    • 51,883 Thanks
    Thrugelmir
    • #4
    • 12th Mar 18, 2:47 PM
    • #4
    • 12th Mar 18, 2:47 PM
    Don't any of your lenders current products allow overpayments to be made?
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • katie4
    • By katie4 12th Mar 18, 2:53 PM
    • 136 Posts
    • 39 Thanks
    katie4
    • #5
    • 12th Mar 18, 2:53 PM
    • #5
    • 12th Mar 18, 2:53 PM
    Don't any of your lenders current products allow overpayments to be made?
    Originally posted by Thrugelmir
    at the moment we have been told max 10% but min of 3x monthly amount (or 1k which ever is more) but we cant afford that upfront we were looking at paying 150-300 extra as over pay

    • Penelopa.Pitstop
    • By Penelopa.Pitstop 13th Mar 18, 10:51 AM
    • 274 Posts
    • 114 Thanks
    Penelopa.Pitstop
    • #6
    • 13th Mar 18, 10:51 AM
    • #6
    • 13th Mar 18, 10:51 AM
    So save for a couple of months and overpay in chunks.

    • prudential
    • By prudential 13th Mar 18, 12:18 PM
    • 17 Posts
    • 9 Thanks
    prudential
    • #7
    • 13th Mar 18, 12:18 PM
    • #7
    • 13th Mar 18, 12:18 PM
    at the moment we have been told max 10% but min of 3x monthly amount (or 1k which ever is more) but we cant afford that upfront we were looking at paying 150-300 extra as over pay
    Originally posted by katie4
    I believe you've misunderstood. I don't think there is a minimum needed for overpayments... you should be able to overpay by as little as 1 or 1p each month if that's how much you want to/can afford to overpay, up to a max of 10% without incurring penalties.

    Payments that are less than 3x your monthly repayment or less than 1K will be treated by your lender as overpayments.

    Payments that are higher than that amount (higher than 1k or 3x your monthly payments) at will be treated by your lender as capital repayments..



    PS. I'm not a broker, this is just my humble knowledge... just an example, not sure who your lender is but they will have a similar policy...

    https://www.coventrybuildingsociety.co.uk/consumer/help/mortgages/repaying-my-mortgage/paying-more.html
    • katie4
    • By katie4 14th Mar 18, 9:00 AM
    • 136 Posts
    • 39 Thanks
    katie4
    • #8
    • 14th Mar 18, 9:00 AM
    • #8
    • 14th Mar 18, 9:00 AM
    I believe you've misunderstood. I don't think there is a minimum needed for overpayments... you should be able to overpay by as little as 1 or 1p each month if that's how much you want to/can afford to overpay, up to a max of 10% without incurring penalties.

    Payments that are less than 3x your monthly repayment or less than 1K will be treated by your lender as overpayments.

    Payments that are higher than that amount (higher than 1k or 3x your monthly payments) at will be treated by your lender as capital repayments..



    PS. I'm not a broker, this is just my humble knowledge... just an example, not sure who your lender is but they will have a similar policy...

    https://www.coventrybuildingsociety.co.uk/consumer/help/mortgages/repaying-my-mortgage/paying-more.html
    Originally posted by prudential


    Nope this was their reply when i asked about overpayments


    capital payment must be either 3 times payment or 1000 whichever is the greater. with a limit of 10% of the balance. for example you couldn't pay 10 as an overpayment


    lender is monmouthshire building society

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