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  • FIRST POST
    • venomizer
    • By venomizer 19th Mar 17, 8:44 AM
    • 3Posts
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    venomizer
    Repayment period
    • #1
    • 19th Mar 17, 8:44 AM
    Repayment period 19th Mar 17 at 8:44 AM
    Just about to take out my first mortgage.
    When deciding on repayment periods i was all set on choosing 25 years. I can afford the repayments on that period and i know it saves me money in the long term.
    Is there any disadvantage to choosing a longer repayment period (say 30 years) but then overpaying to effectively bring it down to 25 years? The way i see it is as a bit of insurance that if i come into financial difficulties in the future, i can stop the overpayments without penalty, which i wouldn't be able to do were i signed up to a 25 year term.
    Obviously i have to be vigilant with the overpayments from the beginning, but are there any other disadvantages with doing this?
Page 1
    • Keezing
    • By Keezing 19th Mar 17, 9:41 AM
    • 208 Posts
    • 156 Thanks
    Keezing
    • #2
    • 19th Mar 17, 9:41 AM
    • #2
    • 19th Mar 17, 9:41 AM
    If you are 100% certain that you have the discipline to overpay then the longer term is the better option, as if you ever experience financial difficulties in the future your contractual repayments will be lower.

    I did the same thing, overpaid for 3 months then life got in the way ;-)
    • AnotherJoe
    • By AnotherJoe 19th Mar 17, 9:47 AM
    • 6,295 Posts
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    AnotherJoe
    • #3
    • 19th Mar 17, 9:47 AM
    • #3
    • 19th Mar 17, 9:47 AM
    Check that there won't be penalties at this planned level of overpayments.
    As you say, watch out for Temptation to spend the money instead.

    An advantage you may not have thought of since it probably seems a long way off - paying into a pension may financially be a much better option than overpaying. Depends on your tax rate , your employers scheme, how much you currently put into a pension.
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