I can make principle only payments on-line on my mortgage.

In the past, I had a very difficult time making principle payments on vehicles. Anything extra I paid, they tried to tell me my next payment wasn't due for x amount of months. I ended up having to talk to several people to make it happen. A mortgage should be straight forward.

Even if you sent a large principal payment to your mortgage company, it would not change your monthly payment unless you refinance. You could pre-pay the payments (which would save you some interest in the long run), but still doesn't reduce the monthly payment.

Remember that in the vast majority of cases, the mortgage company is only servicing the note on your loan, and that your lenders could be anywhere.

As MikeH said, you need to refinance. If you pay extra towards principle, you'll pay off the loan earlier and reduce the total amount you end up paying in interest, but your monthly payment will remain the same as it is now.

this article may help...

If you have a fixed rate loan, you may be able to persuade your lender to renegotiate the monthly payment after your principal reduction, but it will depend on the lender and if they still have the loan on their books. Other types of loans are discussed in the article.

Either it keeps payments same and reduces term or can reduce payments.

Depends on the deal

Some of mortgages have penalties if i pay more than 10% overpayments in one year

Others allow unlimited payments with no fees

You may even be better off looking for new rates and refinancing at the higher equity with someone else

Are you talking about buying down the rate?

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I'll be what I am
A solitary man

No. Just the principal.

As others have stated the lender said that if I just paid it down it would just shorten the length of the loan. So I said I want to reduce the monthly payment.

They are going to contact me

I have a decent rate so refi wouldn’t be that attractive...

I really don't think they are going to present anything worthwhile, my guess is they are going to present you with a refinance which probably isn't that attractive to you as rates are going up.

Shortening the length of the loan also means that you pay less interest. It's probably better for you to do that.

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How does Danny Hart sit down with balls that big?

Update: I spoke to them and for a min of $20,000 they will allow it with zero charges and no change in rate. It’s called recast.

So now I’m thinking about it...

Thanks to all for your feedback.

Might be better, but reading between the lines it sounds like the goal is to impact monthly cash flow immediately.

Just did this with my bank. Dropped 60k on the morgage. All I had to do was request it in writing and wait one payment cycle after the lump payment. They charged me $250 for the recast.

This thread was funny. You asked if anyone had experience buying down and people who had no experience chimed in. As you discovered, it isn't that hard to do, just call the lien holder. Did they charge you?

A little late but I can tell you: all mortgages are banded and rated on default probability. Most banks have no problem, especially if they know they are going to sell the loan, with a buy down because it decreases default probability.

1st time I've heard of recast. Is it more likely that a mortgage company will allow this type of payment when interest rates are likely to go up and there is a good chance of inflation?

I can sorta chime in, kinda.

I started my mortgage and did bi-weekly advanced payments (bi weekly payments and twice a year had payments that went entirely to the principal). I did that for about 8 years, and then with kids the weekly cash flow became a little tighter. But at that point my 25 year mortgage had about 10 years left on it.

I remortgaged when it came up for renewal a while ago and extended the term back to 17 years. So I will have a 25 year mortgage but my payments are now cut in less than half of what they were before. I'll pay more in interest but I'm already making headway on it so it will still be repaid in under 25. Cash flow is better too, which is about the only reason I can see to do what you want to do.

Good luck!

Every time I read a mortgage thread from the US none of it makes sense. I don't know why I always thought lending would be the same in different countries.

Quote:

Every time I read a mortgage thread from the US none of it makes sense. I don't know why I always thought lending would be the same in different countries.

Don't you live in Canada?

http://www.castanet.net/edition/news-story-225155-6-.htm#225155
https://www.bloomberg.com/news/articles/2018-04-30/jumping-mortgage-rates-further-tighten-debt-vise-for-canadians

I would ask how many years are left on the loan and why not take the paydown amount and invest in the stock the market? A good technology index fund would be a good option...

or Take 1 year of the paydown and leave it liquid, take the rest and invest in the stock market. After year 1, take another year of the difference, you get the capital gains of the market, plus the lower payment. Just requires discipline.

I could pay off my house tomorrow but I would rather leave the money in the market.

I do. I understand the principle (get it??) behind it - but how the actual mortgage terms/loans work is very different between countries.

Alternatively you can look at Lombard Loans

I can have money either on deposit OR in a trading account, using a vanguard tracker then borrow against it for my house. The Lombard is 1.42%

So the upside is any difference between market returns and loan rate.

Of course in the event of ww3 I might be out house and savings but in that case I am not sure it would be my biggest problem ;)

It's interesting as I could pay for our house but I don't want to tie all the money up.

Banks must be laughing all the way to, well, themselves.

Get everyone on the long-term hook of big mortgages and low rates, then the screw starts turning.

It will be interesting to see what the market is like in 3 years.

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Long Chile was a silly place.

We also did a recast of the same loan only with a 15 year payoff instead of 30 and adjusted interest rate. We did this about 1.5 years into the loan. It cost us zero. We had to make up the payments of the 1.5 years of paying at the 30 year note rate. Cost us about 10k at the time. So worth it though! When rates tanked in 2012-13 is really made sense for us to refinance to a 15 year loan, however once you included closing cost it started to not be very attractive.

To the Op, if you an get a recast done at very minimal cost besides your pay down amount go for it. It is a win win.