Remortgage to reduce term?

R

RonanL

Registered User
Messages
34
Hello,

My mortgage has 22.5 years to run and it's currently on a variable rate of 3.2% with KBC, with a balance of 175K. The monthly repayments are €906. We'd like to significantly reduce the term of our mortgage. Is remortgaging the only realistic way for us to achieve that? We're thinking we'll reduce the balance to 125K with savings, and try to get a fixed rate mortgage with avant if possible for 5 years to pay off the rest. My only concern with that is all the paperwork / fees. Is there a better way?

Thanks!
 
Consider posting your mortgage details in the switcher thread (in the format shown in the first post). I'll estimate the savings you would make from switching to another lender (or from re-fixing with KBC).
 
Sounds like you can:
1. Apply to Avant and borrow only 125K.
2. Just pay off the balance down to 125K to KBC before you switch
3. I'd suggest to take as long of a mortgage as you can (You can reduce terms but you cannot add later on if you are in need). Take the 5 years fixed and save up in the meantime. If you can pay it off once your 5 years is up, great, if you cannot at least you won't be under pressure.
 
You should be able to make a lump sum payment and when doing so ask them to adjust the term of the mortgage for you. You then just keep paying the same €906 monthly repayment.
Back in the day, I made several lump sum payments off my mortgage and each time I requested that they reduce the term of the loan not the monthly repayment. I continued paying the same amount off the loan each month. I got a letter each time giving me the new amount outstanding and the new term that was left.
 

But I can't fix it and keep paying 906 a month right? I'm fairly set on fixing, it's just whether I go to the hassle/expense of moving banks that's in question at this point I think.
 
RonanL said:
I'm fairly set on fixing,
Click to expand...
If you are on a variable rate loan at the moment, you just ask to be moved to a fixed rate loan. You choose the one you want and the term you want. If it is in-house there should be no problem in doing that.
 
RonanL said:
But I can't fix it and keep paying 906 a month right?
Click to expand...
You can fix with your current provider. You can overpay in two ways:
  1. Save up and pay a lump sum at the end of the fixed term before you roll onto another
  2. Overpay during the fixed term if there is no penalty. Usually there is no penalty if wholesale interest rates have risen which they are very likely to
Personally I don't think shortening a term for its own sake has any upside. Even if your financial circumstances are very good it makes sense to have a longer mortgage term in case you need the flexibility down the road.
 
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