Mortgage question
- Thread starter Exentia
- Start date
Most mortgages won't allow you to do this.
It's one reason why I semi-regret taking out a mortgage over a short term, rather than simply having a standard term but making overpayments. That makes it much harder to borrow more money if needed because it has a much more drastic impact on monthly repayments compared to having a long term mortgage.
e.g. (assuming there are no overpayment penalties), lets say you need to borrow £100k and can afford the payment schedule over 10 years. It may actually be better to borrow it over 20 years and just make overpayments accordingly to pay it off in 10 years. This means that if you have a change of circumstances, you can slap more money on the mortgage, or pay off less each month without any consequences like needing to remortgage.
It's one reason why I semi-regret taking out a mortgage over a short term, rather than simply having a standard term but making overpayments. That makes it much harder to borrow more money if needed because it has a much more drastic impact on monthly repayments compared to having a long term mortgage.
e.g. (assuming there are no overpayment penalties), lets say you need to borrow £100k and can afford the payment schedule over 10 years. It may actually be better to borrow it over 20 years and just make overpayments accordingly to pay it off in 10 years. This means that if you have a change of circumstances, you can slap more money on the mortgage, or pay off less each month without any consequences like needing to remortgage.
let's say, for simplicity's sake, that you have a mortgage that is £100 a month and there's no fees for overpayment, if you paid £200 a month for the first 6months then had a change in circumstances, could you pay nothing for 6months because then you'd have paid £1200 after 12 months? or would you still have to pay £100 a month?
or is that just simplifying things WAY too much?
or is that just simplifying things WAY too much?
Most do have over-payment penalties though, HangTime. After all the lenders want that interest...
You can have payment holidays with some loans, I'm not sure whether mortgage lenders would allow that though.
You can have payment holidays with some loans, I'm not sure whether mortgage lenders would allow that though.
Doesn't quite work that way.
Over payments are a choice and you don't "build them up" so you can then stop paying for a while.
A mortgage repayment should be considered the minimum monthly payment - if you can pay more then great.
Most mortgages allow for payment holidays - I believe I'm allowed 3 months.
If I suddenly found myself without a job I'd immediately give them a call and go on the holiday, I'd easily be able to get a new job within 3 months.
You could claim income support to cover the mortgage anyway for that time (after all, you've paid into the system).
I've just never even looked into overpayments or payment holidays, as the thing just comes out by direct debit every month for the right amount. I think I'm allowed overpayments up to a certain amount per year, but I wouldn't know how to make them anyway, I don't really want to go messing with the DD stuff. Should probably look into it though, as paying more on the mortgage would probably make more sense than paying into an ISA or savings account. Although with an ISA or savings I could get the money out again if I wanted to - Equity Release sounds like a lot of hassle.
I wouldn't have thought income support would cover my whole mortgage.
Of course if I was out of work I'd be entitled to something, but I doubt it would cover the whole bill.
Our mortgage is covered (insurance wise) for death/critical illness but not if I'm out of work.
Mainly because I feel with the payment holidays you're allowed I should be able to get employment pretty quickly.
At the end of the day you do what you need to do.
I'm an IT Manager by trade, but if I was out of work with a mortgage to be paid I'd go and stck shelves at Tesco for a few weeks if that is what it took - gotta keep a roof over your head.
Of course if I was out of work I'd be entitled to something, but I doubt it would cover the whole bill.
Our mortgage is covered (insurance wise) for death/critical illness but not if I'm out of work.
Mainly because I feel with the payment holidays you're allowed I should be able to get employment pretty quickly.
At the end of the day you do what you need to do.
I'm an IT Manager by trade, but if I was out of work with a mortgage to be paid I'd go and stck shelves at Tesco for a few weeks if that is what it took - gotta keep a roof over your head.
We have our mortgage with a Building Society rather than a bank.
If I want to make an overpayment I simply go in, tell them and it is all done quickly and without any hassle.
When we first had or mortgage (with the Halifax) they told us they would arrange for us to get a paying in book for the Mortgage account (think of your mortgage as a bank account with a massive debt) and we could simply use that to make extra payments.
Sure, I can see you're a in a strong position...I'm just looking at it from another point of view. At the very least it will stop additional interest racking up if you were to be out of work for whatever reason.
Although I suppose when I get to that level it would probably be more hassle than its worth.
basically i currently own 3 properties. the first one is an apartment in Manchester that my GFs sister is living in and paying me rent, then theres the the house i currently live in, which I hope to have someone renting by November (this is the mortgage I wanted to reduce by upping the term - buy to let was not an option) and by november my shiny house in the country will be built!
just wanted to get the mortgage payments down on the other house and the mortgage lender wanted me to re apply (first time ive had to and didnt think it right)
just wanted to get the mortgage payments down on the other house and the mortgage lender wanted me to re apply (first time ive had to and didnt think it right)I guess things may have tightened up lately but last time I looked quite a few lenders will allow overpayments and indeed no ERC on non-fixed products. For example I could pay my lifetime tracker mortgage off today and suffer no penalties in addition to a standard exit fee that would apply at the end of the term anyway.
Using this example on my mortgage (Abbey fixed rate) we would have to carry on the payments of £100. The only difference is the mortgage would be paid off slightly sooner due to the repayments.
Some mortgages do allow 'payment holidays' but I don't know if they are related to overpayments or just part of the deal.
With nationwide when you are on a X year deal you can make overpayments of upto 500/month (online payment nice and easy)
Apparantly you can take payment holidays subject to various things and also borrow back to the level of your overpayments.
We overpay by 500 every month which reduces the payment (less interest due and less capital to pay off) for next month in order to keep the term the same.
We were going to opt for a shorter term when the deal runs out next year but given the current situation and the fact that our repayments will go up unless the economy magically recovers.
Apparantly you can take payment holidays subject to various things and also borrow back to the level of your overpayments.
We overpay by 500 every month which reduces the payment (less interest due and less capital to pay off) for next month in order to keep the term the same.
We were going to opt for a shorter term when the deal runs out next year but given the current situation and the fact that our repayments will go up unless the economy magically recovers.
basically i currently own 3 properties. the first one is an apartment in Manchester that my GFs sister is living in and paying me rent, then theres the the house i currently live in, which I hope to have someone renting by November (this is the mortgage I wanted to reduce by upping the term - buy to let was not an option) and by november my shiny house in the country will be built!
have you told the mortgage company that you will be renting the property out? if so, are they ok about it not being on a buy to let mortgage?
yep they are totally aware, they refused the buy to let, (they reckon the house isnt worth waht i said it was even though the house next door to me has just sold for the amount i stated
) so i said fine i want to extend the term to lower the payments.hmm no definitley told them, wouldnt surprise me to be honest fi that were true my lender have been completely rubbish in all deptartments...the advisor told me nothign would get done for the next 2 weeks cuz she was away.....i mean is she the only one who does this job...
