NR's flexible mortgage allowed you to overpay, but if you wanted to borrow-back, there were more restrictive conditions applied, unlike a traditional offset mortgage, so it only loosely resembles an offset and not as liquid.

Most lenders charge a % for an early redemption charge, but others including Nationwide and Coventry will only allow a non-accumulating monthly cash amount.

Brian

Quote"Most lenders allow you to do this. Quote

Be very careful of this, most fixed & tracker mortgages will allow you to only overpay a % mothly/anually, otherwise you will incur penalties. You should always refer to yr KFI or Offer of Loan document/o the KFI section 11 What happens if you want to make overpayments? will state clearly what overpayments can be made./It should also state how yr interest is calculated.

NR have always operated the overpayment/borrow back policy, it resembles an offset without all the add on's ie cheque book etc.....this is one reason why many have advised on this lender

If you do the sums, the figures definitely don't add up. The only way you can reduce your mortgage is by overpayments. Most lenders allow you to do this. Even Northern Rock are allowing me to do it without charging me. I'm paying £200 in overpayments and that is knocking over 9 years off my mortgage. Depending on your lender you can even take back the overpayments later if you find yourself in need of the funds. I advised a work colleague to do this and he's started overpaying by just £50 as that's all he can afford, however he's still knocking a couple of years off his mortgage term. His intention is to increase it by £50 each year if funds allow. People may disagree with my thought process but any extra you can pay, then pay it each month as most lenders calculate their interest daily.

Well, the benifit of your friends suggestion would be that if you weren't able to regularly afford to pay the monthly payments of a 21 year mortgage, then remortgageing to a 30 year term would decrease the monthly payments. The total amount payable (the amount you would have paid by the end of the mortgage) would increase quite a lot by doing this.

The "trick" your friend means is, that you have a lower regular montly payments. If you can afford to "overpay" monthly, then you will reduce the total amount payable. Like someone said earlier, if you "overpay" by the saving of the monthly amount you'd probably pay it off in 21 years anyway.

It gives you the flexability of overpaying when you can afford to.

I'm assuming it's a repayment mortgage, and that you'll be allowed to do overpayments without charge, and the rates are the same.

Can someone confirm this is correct?

What your friend was suggesting would probably knock 9 years off your 30 year mortgage, i.e. puts you back in exactly the same situation you were in originally. I think he was either pulling your leg or has no idea how mortgages work.

Brian

Play around with the figures in this calculator.

http://www.moneymadeclear.fsa.gov.uk/tools.aspx?Tool=mortgage_calculator

Interest is payable on the amount outstanding, reducing the amount outstanding, reduces the interest due. Whether you call this overpaying or not is irrelevant.

I got some advice from a 'family' friend at a wedding. he informed me that if i increased my term of my mortgage from 21 to thirty years this would obviously reduce my monthly payment. he said the trick was to keep paying what i am now, which is in effect over paying ( which lender allows) this overpayment comes direct off the capital therefore reducing what you owe and pay interest on. he syas that this will knock years off your term but for no extra monthly cost. Has anyone tried this or any advice would be appreciated.