Lowering term of mortgage buy continually re-mortgaging

[Du1point8]

Dizeee said:

swerni said:

This .

James, assuming the same interest rate, reducing the term just increases your monthly payment each time you do it.
Either repay slightly or as elise said, get am offset.
The person who benefits most from you changing product every couple of years is the broker. ( assuming no decrease in the interest rates)

How does an offset mortgage work?

Mortgage is £200k
Have an account with same bank that has £30k in savings.

on an offset you are only paying interest on £170k as they offset the savings against the mortgage, even though you still have those savings, so its like you have just put everything into the mortgage.

If you take £20k out, the interest on the mortgage is based upon £190k.

[98elise]

Du1point8 said:

Dizeee said:

swerni said:

This .

James, assuming the same interest rate, reducing the term just increases your monthly payment each time you do it.
Either repay slightly or as elise said, get am offset.
The person who benefits most from you changing product every couple of years is the broker. ( assuming no decrease in the interest rates)

How does an offset mortgage work?

Mortgage is £200k
Have an account with same bank that has £30k in savings.

on an offset you are only paying interest on £170k as they offset the savings against the mortgage, even though you still have those savings, so its like you have just put everything into the mortgage.

If you take £20k out, the interest on the mortgage is based upon £190k.

It's also a great way of avoiding tax on interest especially of you pay high rate. In relative terms you are also getting a good rate of interest on your savings.

[Du1point8]

98elise said:

Du1point8 said:

Dizeee said:

swerni said:

This .

James, assuming the same interest rate, reducing the term just increases your monthly payment each time you do it.
Either repay slightly or as elise said, get am offset.
The person who benefits most from you changing product every couple of years is the broker. ( assuming no decrease in the interest rates)

How does an offset mortgage work?

Mortgage is £200k
Have an account with same bank that has £30k in savings.

on an offset you are only paying interest on £170k as they offset the savings against the mortgage, even though you still have those savings, so its like you have just put everything into the mortgage.

If you take £20k out, the interest on the mortgage is based upon £190k.

It's also a great way of avoiding tax on interest especially of you pay high rate. In relative terms you are also getting a good rate of interest on your savings.

That too, I wish I had done it, however I got offered 2.94% for 5 year fixed and jumped on that last month and just waiting for the paper work to go through.

Next time its going to be a offset mortgage/re-mortgage.

[MrSparks]

Dizeee said:

This is essentially the exact scenario that we have been advised is easily achievable - notwithstanding the arrangement fee on the mortgage + broker fee (if we used a broker).

I have actually temporarily stopped overpaying my mortgage to ensure that I finish the renovation in time to re-fix at the lower rate as although overpaying will reduce the term, you can't beat knocking 8 years off your term, and reducing the monthly payments in one go.

The downside, and I think will answer your initial question, is that you can only really do this once, and only if you can half the rate. Once I've done this it'll just be a case of overpaying to further reduce the term

[edc]

Du1point8 said:

98elise said:

Du1point8 said:

Dizeee said:

swerni said:

This .

James, assuming the same interest rate, reducing the term just increases your monthly payment each time you do it.
Either repay slightly or as elise said, get am offset.
The person who benefits most from you changing product every couple of years is the broker. ( assuming no decrease in the interest rates)

How does an offset mortgage work?

Mortgage is £200k
Have an account with same bank that has £30k in savings.

on an offset you are only paying interest on £170k as they offset the savings against the mortgage, even though you still have those savings, so its like you have just put everything into the mortgage.

If you take £20k out, the interest on the mortgage is based upon £190k.

It's also a great way of avoiding tax on interest especially of you pay high rate. In relative terms you are also getting a good rate of interest on your savings.

That too, I wish I had done it, however I got offered 2.94% for 5 year fixed and jumped on that last month and just waiting for the paper work to go through.

Next time its going to be a offset mortgage/re-mortgage.

You can have a fixed rate/term with an offset. I have a fixed 2.09% with an offset facility.

[Du1point8]

edc said:

Du1point8 said:

98elise said:

Du1point8 said:

Dizeee said:

swerni said:

This .

James, assuming the same interest rate, reducing the term just increases your monthly payment each time you do it.
Either repay slightly or as elise said, get am offset.
The person who benefits most from you changing product every couple of years is the broker. ( assuming no decrease in the interest rates)

How does an offset mortgage work?

Mortgage is £200k
Have an account with same bank that has £30k in savings.

on an offset you are only paying interest on £170k as they offset the savings against the mortgage, even though you still have those savings, so its like you have just put everything into the mortgage.

If you take £20k out, the interest on the mortgage is based upon £190k.

It's also a great way of avoiding tax on interest especially of you pay high rate. In relative terms you are also getting a good rate of interest on your savings.

That too, I wish I had done it, however I got offered 2.94% for 5 year fixed and jumped on that last month and just waiting for the paper work to go through.

Next time its going to be a offset mortgage/re-mortgage.

You can have a fixed rate/term with an offset. I have a fixed 2.09% with an offset facility.

wasn't offered despite me asking about it with my bank...

[edc]

Perhaps your bank doesn;t have that as a product. Why not look at what else is out there rather than just what the bank can provide?

[Du1point8]

edc said:

Perhaps your bank doesn;t have that as a product. Why not look at what else is out there rather than just what the bank can provide?

I did, broker could get near them on the %wise for 5 years fixed.

I was classed as top rated remortgage with LTV of high 40s/low 50s...

Will try to look at the directly next time as I see that as a good way to save more, even if the % on the rate is not as good.

[andye30m3]

As rates have dropped over the years I've tended to reduce the term of mine and keep the payments the same.

Now it's basically used to fund a buy to let I'll reduce the term again if the month rental goes up before the renewal time.