Mortgage Repayments Query

emclau

I want to understand how flexible banks are with mortgage repayments.

If a person was to take out a 250k loan, repayments at current rates would range from 1100 to 1500 based on term of loan from 20-35yrs. (Aware interest rates will probably rise in long term/circumstances will change).

How flexible are banks with mortgage repayments? If I wanted to repay more on my mortgage each month, or make a lump sum payment against my mortgage, do the banks generally allow this?

Similarly, if I wanted to go for a 20yr loan, and decided to change to a 35yr loan to lower repayments a few years down the line, are the banks generally receptive to this change?

Thanks

Lenny

Its not problem to increase your payments.
people generally take out the longest years available, and then up the payments.
just remember though if you're paying a lump off that you let them know its off the principle and not towards the payments
its better to make more payments per month then a lump sum at the end of the year, as you're paying interest daily on what you owe.

ladysarah

you cannot extend the life of your mortgage but you can decrease it if you are on variable.

D3PO

ladysarah wrote: »

you cannot extend the life of your mortgage but you can decrease it if you are on variable.

WRONG.

Banks would not be receptive to it if you were able to make your repayments but there are many many thousands of mortgage holders who have restructured to longer terms in the past few years.

ladysarah

yes they will restructure for a certain period but They wIllnot let ypu extend the life ofthe mortgage without going through the criteria again. Just double checked it with my friend who is a bank manager.

The_Conductor

ladysarah wrote: »

yes they will restructure for a certain period but They wIllnot let ypu extend the life ofthe mortgage without going through the criteria again. Just double checked it with my friend who is a bank manager.

It depends on the bank to be honest- most banking institutions are taking a philosophical approach to things and going with the assumption that its better to restructure over a longer term if it makes the debt sustainable for the borrower (and the banking institution). KBC and BOI definitely do not require their customers go through the lending criteria again, I'm not sure about other lenders- all the two aforementioned institutions require is the standard assessment that they're applying to all borrowers seeking a restructuring (aka- you can't just walk in the door and ask to make the term longer- you do have some paper work to complete- but its not a rerun of the mortgage lending criterion (as you have the loan already in any event)).

tigershould

Sorry to hijack thread but I just asked EBS to up my repayments on my variable tracker mortgage and they sent me a letter readjusting my term length (~29 years to 17)

Should I be asking them to take it from 'principle' or 'payment' or is that only necessary for lump sum payments?

The_Conductor

tigershould wrote: »

Sorry to hijack thread but I just asked EBS to up my repayments on my variable tracker mortgage and they sent me a letter readjusting my term length (~29 years to 17)

Should I be asking them to take it from 'principle' or 'payment' or is that only necessary for lump sum payments?

When you're accelerating repayments on your mortgage- there is an implicit understanding that you are shortening the term of the mortgage. When you are making a lump sum repayment- there is no such understanding and you have to specify whether you wish to shorten the term of the mortgage or reduce the term payments.

You could request to make accelerated repayments for a specific term, followed by reduced repayments, it would be unusual, but I can't see why it wouldn't be acceded to (providing of course that your lower repayments continued to service the interest component as a very minimum).

MMAGirl

OP we got a 30 year mortgage even thoughh we only originally planned to get a 20 year one.
The idea was that we woulld make payments off the longer mortgage of the same amount as the lower term mortgage would be. Therefore turning the 30 year term into a 20 year, but then having the option to pay the 30 year amount if we ever needed money.
Turned out that we got it all paid off in 11 years anyway, but it was comforting knowing the option was there.
Go for the longer terrm and you can increaase payments if you like. But with the shorter term you cant decrease payments.

Chris_5339762

Generally you can 'overpay' on the variables, but not on the fixed terms. [That said, Ulster Bank do let you overpay by a certain amount on their fixed term]