reducing Mortgage length

[steveyd]

I have been told that changing the period of mortgage on a 300k loan from 35 to 30 years, would over the period save you over 20K.

If i am on a tracker mortgage, is it easy to change length of mortgage or make additional one of payments to the mortgage at certain times when you may have excess cash,( i.e bonus payments)?

Also my mortgage protection is over 35 years, if mortgage is reduced to 30 years do you need to bother changing details on policy, as obviously you will be insured over the 30 years?

 

[ClubMan]

You can reduce the effective term of a mortgage by making accelerated lump sum or regular (monthly) mortgage repayments. Just make sure to put your instructions in writing to your lender as regards any overpayment so that they are clear that these are capital repayments. There are no penalties on owner occupier variable/tracker rate mortgages for making such accelerated repayments. Some lenders may have minimum amounts which they will accept though. Check with your lender and if you have a lump sum or regular additional amount of cash to direct towards the mortgage and not required for any other immediate purposes then this is a good way to save money and get an effective guaranteed and immediate "return". Karl Jeacle's mortgage calculator is useful for modelling the effects of such accelerated repayment strategies on effective mortgage term and total mortgage interest costs. In terms of mortgage protection life assurance you can just leave the existing policy in place and then terminate it (if you choose) when the mortgage is cleared before the originally arranged term is up.

 

[irishpancake]

I have been told that changing the period of mortgage on a 300k loan from 35 to 30 years, would over the period save you over 20K.

If i am on a tracker mortgage, is it easy to change length of mortgage or make additional one of payments to the mortgage at certain times when you may have excess cash,( i.e bonus payments)?

Also my mortgage protection is over 35 years, if mortgage is reduced to 30 years do you need to bother changing details on policy, as obviously you will be insured over the 30 years?

Put the figures into Karl Jeacle's Mortgage Calculator

I calculate a saviong of €33k over the 30 year term, as opposed to 35. Obviously, there are even more savings to be made if you reduce the term even further.

It would also depend on your lender as to how they would facilitate accelerated payments, as some want specific sums paid regularly, some actually allow fortnightly as opposed to monthly payments, etc.

Edited by Irishpancake

sorry for crossing with Clubman. His advice here is absolutely correct