Mortgage Term

[airgead07]

I currently have a 35 year mortgage but would now like to reduce it to a shorter term.

Are there many complications with this?

I haven't spoken with my own bank yet but is it possible to retain the same interest rate whilst reducing the term?

Does the solicitor have to become involved?

 

[Bank Manager]

No problem at all - just ask your mortgage provider to increase your repayments to whatever figure you have in mind. No need for a solicitor to become involved.


Regards,


BM

 

[dodo]

If you are on internet banking I think you could transfer a certain amount each month

 

[Satanta]

If you are on internet banking I think you could transfer a certain amount each month

The advice in many previous AAM threads (lots of them out there if you do a search) is to inform your bank in writing and request that they put the additional payments against the capital in order to reduce the interest. If you simply increase your payment via online banking the excess might just be held as a credit on the account and not reduce the capital (and therefore not reduce the interest being paid).

No personal experience of this and guess it depends on the bank in question, but best to be sure and confirm the change(s) in writing.

 

[ClubMan]

I totally agree and probably posted at least some of the advice to which you refer. There have been several examples here and elsewhere of people chucking money into their mortgage assuming that it was chipping away at the capital but discovering later that it was not. If you want to accelerate the repayment of the capital by making lump sum or regular additional capital repayments then agree this in writing with your lender. You don't necessarily have to reschedule the loan as such but the accelerated capital repayment strategy will reduce the effective term and will reduce the overall interest costs of the mortgage. If you have no other higher cost debts, you have the disposable income spare and don't have anywhere better for it (e.g. tax deductible pension contributions) then it's a good way to "save" money.