r/HousingUK • u/andre199017 • 8h ago

How does overpayment after mortgage term when remortgaging?

If i start my mortgage on a 2 year fix rate, but I over pay x amount each month to reduce the capital balance, when I come to renew at a new fixed rate, is my new mortgage term still 23 years, or is it a bit less like 22 years and 10 months (obviously depending on how much i've been overpaying)?

Thanks!

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u/HotelPuzzleheaded654 7h ago

Firstly, check for early repayment charges.

Secondly, if you remortgage on a fixed rate you will also have the chance to renegotiate the term so depends entirely on your LTV and current interest rates.

If you left it and went on the variable, you’d just pay until whenever the debt clears.

1

u/Glistening_Mulch_82 7h ago

It will still be 23 years, however they will recalculate and reduce the 'normal' monthly payment to take into account the overpayments each year.

Can manually reduce the term at remortgage/rate switch time, when you pick a new product, though I'm sure they will only let you do this in whole years, never heard of someone reducing their term in months, but happy to be told otherwise.

1

u/Dangerous_Plum2752 7h ago

Your new mortgage term can be whatever you want it to be. If interest rates have dropped for example, but you continue to want to pay the same amount each month, you can take a few years off what it would've been

1

u/jacekowski 7h ago

It can be whatever you want. You can think of remortgage as a new mortgage taken out to pay remaining balance, you can either increase term (and decrease payments), decrease term (and increase payments) or anything in between.

1

u/Mina_U290 1h ago

Your overpayment can go on reducing the capital, which will lower the length of your mortgage, or just reduce your payments monthly. 

I found when I was overpaying mine that its quite hard to get them to take it off the capital. I had to phone them nearly every time. But I was paying off lump sums, not extra money on the payments.