Fix and Reduce Mortgage Term or Fix, leave term and overpay

eddiem74

Just looking for some advice.

Considering some of the fixed rate options as our LTV has improved (60-80%) and sadly I was not really paying attention and have been paying a variable of 4.25% (KBC) when I should have been on a better deal.

Rough figures: remaining term is 25 years, amount €300k.

So now the decision is:

1) Do we fix on a lower rate and reduce mortgage term to maintain a payment similar to what we currently pay on the variable?, or
2) Do we fix, leave the term as is (so a lower monthly payment) and then overpay to what we currently pay on the variable?

Appreciate advise or examples to guide the right decision here. Thanks!

Wheety

You can now fix at 2.65% with KBC for 5 years. Can you easily afford the higher amounts? Would the extra money in your account make a difference to you?

Any other expenses on the horizon like kids or new car/house improvements?

eddiem74

Wheety wrote: »

You can now fix at 2.65% with KBC for 5 years. Can you easily afford the higher amounts? Would the extra money in your account make a difference to you?

Any other expenses on the horizon like kids or new car/house improvements?

Option 1 would be to fix at the lower rate, reduce our term to maintain the same payment we make currently on the variable.

Option 2 would be fix keep the term and therefore have a lower monthly payment than currently but have the potential to overpay up to the current amount.

We can afford to maintain the current amount. Extra money is always nice and my wife's view would be fix and leave the term. We have already put one kid through college with our current arrangement.

Wheety

I would leave the term and overpay. During the fixed term you can over pay by 10%. That means you can overpay 10% of the balance, at the time you fix, over the term of the fixed period.

Doing it this way means you can stop overpaying when you want.

august12

Wheety wrote:

I would leave the term and overpay. During the fixed term you can over pay by 10%. That means you can overpay 10% of the balance, at the time you fix, over the term of the fixed period.

Let's say one borrowed 100,000, can I over pay 10,000 if this is year one, is there any specific time of the year to overpay i.e. the start or end of 12 months or per month?

Purple Sheep

august12 wrote: »

Let's say one borrowed 100,000, can I over pay 10,000 if this is year one, is there any specific time of the year to overpay i.e. the start or end of 12 months or per month?

I started throwing extra pennies at the mortgage just a couple of months in so I don't think there's any such rule. I would call them first to confirm the maximum overpayment you can make though. The 10% total they gave me was a bit different from what I'd calculated myself, slightly less.

august12

Purple Sheep wrote:

I started throwing extra pennies at the mortgage just a couple of months in so I don't think there's any such rule. I would call them first to confirm the maximum overpayment you can make though. The 10% total they gave me was a bit different from what I'd calculated myself, slightly less.

Will call them to confirm once payments commence, thanks