settle a fixed rate mortgage argument for me please

[Tortington]

1)you get 2 year fixed term mortgage

you recieve a lump sum inhertitance after taking mortgage out - this doesn't allow you to pay the morgage off

you can lower the payments but you have to carry out the two year fixed term before you can change the mortgage.

2)you get the lump sum - pay a mortgage penalty and even though you can't pay te mortgage off you can re-negotiate it within the fixed term.

Dh's premis is that unless e have enough money to pay the mortgage in full - we cannot negotiate or change our mortgage within the fixed term.

is he right?

I think you can pay it all off (or substantially off) but there are penalties

but often you can pay off a percentage - eg 10% depending on lender - each year without penalty

it depends on the terms of your mortgage I guess

so you can pay some of it off pay a penalty and re-negotiate a new mortgage?

within a fixed term

We pay chunks off our mortgage every 2 years in the month before the two year fix comes to an end to avoid paying the penalty.

So say you're one year into a two year fix, I'd bung the lump sum into a high interest a/c then pay it off the mtge in 11 months time.

Do you mean fixed TERM or fixed RATE?

During a fixed rate period, it will depend on the specific mortgage/lender... on mine I can pay off a certain amount without penalty. I can also remortgage during the period of the fixed rate under certain circumstances, eg. moving house. (have to pay redemption penalty and then get it refunded when new mortgage kicks in).

Suggest there is no definitive answer and you have to ask a specific lender about their actual product.

HTH

can i pay a huge lump off and get another mortgage within the fixed term

i dont care about te penalty to much

Or get a mortgage with an offset account... then it comes off the mortgage without you actually "paying it off"

term adn rate

Either could be correct ! You can usually make capital repayments up to a certain amount each year without penalty, not necessarily to redeem the full value of the mortgage (which would attract early redemption penalties) . Similarly to renegotiate the whole mortagge withinthe fixed period would attarct early recemption penalities but you probably can't keep that same fixed rate deal for the balance of time, it would be a new one (likely to be at a higher rate as things stand but the offered rate may benefit from having a lower loan to value ratio).

Care about the penalty it could be high!

My advice:

• Pay the maximum lump sum you are allowed to (usually 10% per year);
• switch your mortgage to interest only (most mortages will allow that not a nominal fee say £90)
• deposit your inheritance into the highest earning account that you can find on a short notice period and one that allows you to have the interest paid nito your current account
• use the interest to pay your mortgage (it should come close)
• pay off mortgage at end of term using savings.

You can pay parts if it is in the agreement.Usually a % per year so you can pay them some in year one and then more in yr2 and keep the balance in an account matching the interest.You only pay the big fee if you redeem the whole thing iirc