2. Also should I ask them to reduce the capital but keep the term of the mortgage the same or should I ask them to keep the repayments the same? Do not understand the difference between the two options. Would be grateful if someone could explain it to me.
Thanks
example | Original | Reduce Term | Reduce Repayment |
Loan Amount | 200,000 | 180,000 | 180,000 |
Rate | 3% | 3% | 3% |
Term | 20 | 17.5 | 20 |
Repayment | €1,109 | €1,103 | €998 |
Total interest | 66,207 | 51,585 | 59,586 |
I did this earlier in the year and the payment itself was painless. What was not painless however was that UB decided unilaterally to reduce our monthly payment rather than the term. One purposeful phonecall followed by a sharply worded letter and this was resolved to our satisfaction.
In any event, I'm not sure that is 'standard' to reduce the payment. It certainly isn't advantageous from a mortgage loan duration aspect and which benefits the bank with more interest over time. This is why they default to it I assume.
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