What do the AAM brain trust think about shortening the term vs. decreasing the monthly repayments when over-paying? Are both options always available, are there merits to one over the other?
I'm hoping to pay-off some of mine later in the year (likely a lump sum to get down below 60% LTV) and would prefer to see the monthly repayments come down, rather than shortening the term. My logic being that shortening the term means that if some day money is tight, you're still "stuck" on the higher repayments and might regret having paid back part of the mortgage and not having that cash there, whereas getting the monthly repayments down makes it easier to manage the monthly repayment if you did get into money trouble some day.
BoI allow you overpay 10% on your monthly repayment on fixed rate. Don't allow large capital repayments. So you'd need to trickle it in monthly.
So basically, it's 300 eur to pay off a lump sum on your current fixed rate mortgage or 1514 eur if you choose to do a different type of loan as well. They told me that those fees change everyday so it will be slightly different if you call them later on.
- When did you originally fix (month and year)? 07/2016
- For how long? 5 years (@ 3.45%)
- What's your mortgage balance? 222K
- How big was the lump sum that you wanted to pay off? 50K
@Paul F
How did you make your calculations?
How about a 10 years fixed rate mortgage @ 3.3% (Balance 117K) with 5 years to go in the fixed term, what if you want to pay lump sum of 25K ?
Just curious because my plan is to get a Split rate mortgage (10 years fixed + SVR)
Pay off 50K, then split the rate and put 30K on the SVR loan, pay this off as quick as possible and I will end up with just the 10 years fixed rate to pay at 750 eur per month instead of 1200 eur currently. The continue saving and, either make an overpayment during the fixed rate term or wait and payoff the mortgage in 10 years
Thanks @Paul F
I was only asking for the break fee in 5 years just as an example, being half way through a 10 years fixed rate because I wasn't sure how much of an impact the remaining years left on the fixed rate would have on a breaking fee
How do you calculate the overpayment fee if you stay with your current fixed rate? it seems to be much lower than the breaking fee so it's a good option too I think.
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