Is it possible to shorten the term of my mortgage

solerina

Hi, I have 15 years of a 35 year mortgage paid. Is it possible to shorten the term to say 25 years ?? So I would only have 10 years left instead of 20.
I know I can overpay but is it possible to shorten the term officially ? thanks.

Truckermal

solerina wrote: »

Hi, I have 15 years of a 35 year mortgage paid. Is it possible to shorten the term to say 25 years ?? So I would only have 10 years left instead of 20.
I know I can overpay but is it possible to shorten the term officially ? thanks.

Yes you can by either making cash payments into your existing mortgage or switching providers which is a even better idea, I'm doing both and knocked over 10 year's off it so far.

MisterDrak

The think to remember when making out of course cash lodgements to the mortgage, is that you have two potential choices to make, when the lodgement is done:-

1. Maintain the term with a lower monthly installment
2. Reduce the term with the same Monthly installment

Reducing the outstanding balance can have other effects on the rate such as bringing the LTV (Loan to Value) below a rate threshold, so benefiting from a (slightly) better rate on the outstanding debt.

As the other poster suggest switching can potentially have the largest benefit.

wench

solerina wrote: »

Hi, I have 15 years of a 35 year mortgage paid. Is it possible to shorten the term to say 25 years ?? So I would only have 10 years left instead of 20.
I know I can overpay but is it possible to shorten the term officially ? thanks.

Most banks will happily formalise a shorter term and higher payment.
However, should anything happen down the line and you wanted to reverse that, you may find them less agreeable.


Overpaying and keeping your original term gives you the greatest flexibility.

Wanderer78

wench wrote:

Overpaying and keeping your original term gives you the greatest flexibility.

Overpayment is definitely the way I'd go, but I believe some financial institutions won't allow

solerina

Thanks so far everyone, anyone else who has info please continue to comment !!! I just feel so depressed when I see how much the loan still in in comparison to how much I have paid towards it....the amount I have knocked off the principle is minute...I have only paid interest.
Is switching provider very difficult ? I have a perfect credit rating.

rainbowtrout

I did this years ago. I took out a 35 year mortgage and a couple of years in I shortened in by about 15 years. I wrote to the bank and told them I wanted to shorten the term and by how much. They sent me a letter detailing the new end date and monthly repayment. I chose to do this instead of making overpayments because it forced me to make the higher payment each month (I could afford to do so). I shortened it again a couple of years later, and because I was on a tracker now and again I threw in lump sums. In all my mortgage (which is paid off) went from 35 years to 10.5 years.

jack in the box

solerina wrote: »

Hi, I have 15 years of a 35 year mortgage paid. Is it possible to shorten the term to say 25 years ?? So I would only have 10 years left instead of 20.
I know I can overpay but is it possible to shorten the term officially ? thanks.

Not sure why you would want to do it officially. Just overpay it every month, it works out the exact same in terms of interest/principle paid. This would give you more flexibility.

solerina

solerina wrote: »

Hi, I have 15 years of a 35 year mortgage paid. Is it possible to shorten the term to say 25 years ?? So I would only have 10 years left instead of 20.
I know I can overpay but is it possible to shorten the term officially ? thanks.

Just overpay by an amount that will have it repaid in 10 years. It’s a very bad idea to officially reduce the term as if you ever need to reduce what you pay then it’s a massive headache rather than just falling back to the lower payment if you are over paying.

torrevieja

if i can ask here if you change provider do u loose much by doing this, does ur broker make much from this change ?

pwurple

jack in the box wrote: »

Not sure why you would want to do it officially. Just overpay it every month, it works out the exact same in terms of interest/principle paid. This would give you more flexibility.

It is encouraging mainly. I found the letters saying , “your term is now 23 years”, “your term is now 12 years 5 months” , “your term is 3 years” to be highly motivational!

Similar to rainbowtrout above, we always reduced term aggressively, to pay off early.

pwurple

Thatcher Fierce Liquid wrote: »

Just overpay by an amount that will have it repaid in 10 years. It’s a very bad idea to officially reduce the term as if you ever need to reduce what you pay then it’s a massive headache rather than just falling back to the lower payment if you are over paying.

Far too black and white to say it’s a “bad idea”. It’s a very good idea indeed if you have a stable job and are young enough to not have health concerns.

It is a very useful tool to motivate you to a solid financial goal.

pwurple

pwurple wrote: »

Far too black and white to say it’s a “bad idea”. It’s a very good idea indeed if you have a stable job and are young enough to not have health concerns.

It is a very useful tool to motivate you to a solid financial goal.

Sorry but no, It is very bad financial advice. Always take the maximum term mortgage you possibly can and keep it. As I said you can overpay and it’s the very same thing as having the shorter term but with the safety net.

Bob24

As long as you are on a variable rate, I think you can just ask the bank to temporarily your monthly repayments. And I don’t believe this is a new contractual commitment, i.e. if at a later stage you want to revert back to the original repayment amounts you can do that.

Bob24

wench wrote: »

Most banks will happily formalise a shorter term and higher payment.
However, should anything happen down the line and you wanted to reverse that, you may find them less agreeable.

Why so? In the exemple I came across, increasing monthly paynents didn’t require a new contract - it was more like an instruction to the bank to temporarily increase monthly direct debits with no end date but which could be cancelled at anytime.

Also in most cases the bank would actually prefer lower monthly repayments as it means they are making more money with interests - I.e. even if they could there would be no reason for them to prevent someone from reverting to lower payments.

wench

Bob24 wrote: »

Why so? In the exemple I came across, increasing monthly paynents didn’t require a new contract - it was more like an instruction to the bank to temporarily increase monthly direct debits with no end date but which could be cancelled at anytime.

Also in most cases the bank would actually prefer lower monthly repayments as it means they are making more money with interests - I.e. even if they could there would be no reason for them to prevent someone from reverting to lower payments.

The OP asked about formally changing her contracted amount and term, not just overpaying.

The reason it can cause problems is that should you find your circumstances change and you can't keep up the higher repayment, you'll basically be telling your bank you can't afford the mortgage.
This may then trigger their mortgage arrears process to deal with it. MARP
Whereas if you'd left your term alone, you could drop back to the previous lower amount no questions asked.

mirrorwall14

solerina wrote: »

Thanks so far everyone, anyone else who has info please continue to comment !!! I just feel so depressed when I see how much the loan still in in comparison to how much I have paid towards it....the amount I have knocked off the principle is minute...I have only paid interest.
Is switching provider very difficult ? I have a perfect credit rating.

Have you made sure to request that the additional payment is going toward the principal?

I wouldn't shorten the term. It's much harder to lengthen it if something goes wrong. We are overpaying ours but definitely wouldn't make that obligatory

Bob24

wench wrote: »

The OP asked about formally changing her contracted amount and term, not just overpaying.

The reason it can cause problems is that should you find your circumstances change and you can't keep up the higher repayment, you'll basically be telling your bank you can't afford the mortgage.
This may then trigger their mortgage arrears process to deal with it. MARP
Whereas if you'd left your term alone, you could drop back to the previous lower amount no questions asked.

OK I get where you are coming from and indeed if this is the case a new contract wouldn’t make sense.

But while I might misunderstand, I think what the OP wants simply is to change the automatic monthly direct debits so that they match a shorter mortgage term (without them having to make the over payments manually each month). Is that correct OP?

I believe if you are on variable, most lending institutions will let you do that without signing a new contract.

pwurple

Thatcher Fierce Liquid wrote: »

Sorry but no, It is very bad financial advice. Always take the maximum term mortgage you possibly can and keep it. As I said you can overpay and it’s the very same thing as having the shorter term but with the safety net.

First of all, I'm not giving financial advice, as you appear to be. I'm relating my own experiences.

Based on my decades of experience, and my education, I disagree. In my experience, it is not "very bad" to reduce a loan term, as it strongly motivates the over-payment.

People can assess their risk of something unforseen happening, but some of the heavier potential risks are covered by various policies already. Life assurance, critical illness policies either privately or at work, or other insurances and supports.


It's "very bad" to stop paying your mortgage.

It's "very bad" to run a credit card debt up.



Saving yourself thousands of euro on interest is positive.

pwurple

pwurple wrote: »

Saving yourself thousands of euro on interest is positive.

Which can be done without officially reducing the term and just overpay.

There is no reason to officially reduce the term, it can only be a bad thing. It may not be but that’s the only possible difference between overpaying and officially reducing the term.

solerina

Bob24 wrote: »

OK I get where you are coming from and indeed if this is the case a new contract wouldn’t make sense.

But while I might misunderstand, I think what the OP wants simply is to change the automatic monthly direct debits so that they match a shorter mortgage term (without them having to make the over payments manually each month). Is that correct OP?

I believe if you are on variable, most lending institutions will let you do that without signing a new contract.

OP here....I dont mind how I achieve it, I just don’t want to keep paying my mortgage for 35 years..20 more, I am in a position to pay more each month so I was wondering what is the best way to pay off my mortgage in less time..say 20 or 25 years. I am on a variable rate but am considering going fixed as it’s 0.8% per month cheaper(can get 2,3,4,5 year fixed) so wanted to think about my options before I did anything. Thanks again to all who have replied

Bob24

solerina wrote: »

OP here....I dont mind how I achieve it, I just don’t want to keep paying my mortgage for 35 years..20 more, I am in a position to pay more each month so I was wondering what is the best way to pay off my mortgage in less time..say 20 or 25 years. I am on a variable rate but am considering going fixed as it’s 0.8% per month cheaper(can get 2,3,4,5 year fixed) so wanted to think about my options before I did anything. Thanks again to all who have replied

Ok so yeah you can probably go to your bank and either:
- ask them increase your monthly repayment *without signing a new contrat* and remain on their fixed rate
- ask them increase your monthly repayment *without signing a new contrat* and fix your rate based on their existing offers (note that if you fix the rate you are probably losing some flexibility in terms of future rate changes and repayment amount changes)

Or of course you can move your mortgage to another bank and go for any option they offer for switchers.