Overpayment reduce monthly or reduce term which better

doc_ni

Hello All,
I am bit new to this forum, apologies if discussed before,
If you are making over payments to your mortgage, is it better to reduce monthly mortgage payment or decrease term.

Regards

jillymit

I would think it would depend on the reason you want to over pay.
Reducing the overall amount will save you money (interest).
Reducing the monthly amount may help you manage other bills with the spare money ( spare money! get me!)
If I could afford it I would reduce the overall loan, save myself a heap of interest and be mortgage free sooner rather than later.
Just my opinion

omelette451

If you can afford it and there are no penalties for doing so, it is better to carry on making the overpayments as that ultimately reduce the amount you pay in interest and allow you to be mortgage-free much sooner than you would be otherwise.

If, of course, you subscribe to the government's 'we all need to spend spend spend to work our way out of the recession' you may want to take the money and buy something nice with it. Personally I'd take the first option, but it's up to you.

hughmungas1986

Personally I have left my payment the same therefore every month I am overpaying by more and reducing the term considerably.

Have a look at the mortgage calculators and see whats best for you.

hugh

uzubairu

omelette451 wrote: »

If you can afford it and there are no penalties for doing so, it is better to carry on making the overpayments as that ultimately reduce the amount you pay in interest and allow you to be mortgage-free much sooner than you would be otherwise.

We're on a fixed rate and we have a £500 monthly overpayment limit (without penalties), so we have reduced the term twice to enable us to pay more (as our household budget allows).
Initial scheduled mortgage payments were £646 and have now been increased to £891, and we can still overpay by £500.

Due to overpayments our mortgage term remaining has been reduced from 22.5 years to 12.5.

If we are able to maintain the same level of overpayments (fingers crossed) we should be mortgage free when the fixed rate period ends in 2016 (15 years early).

jillymit

uzubairu wrote: »

We're on a fixed rate and we have a £500 monthly overpayment limit (without penalties), so we have reduced the term twice to enable us to pay more (as our household budget allows).
Initial scheduled mortgage payments were £646 and have now been increased to £891, and we can still overpay by £500.

Due to overpayments our mortgage term remaining has been reduced from 22.5 years to 12.5.

If we are able to maintain the same level of overpayments (fingers crossed) we should be mortgage free when the fixed rate period ends in 2016 (15 years early).

WOW ! good for you :T

Phlip_corter

doc_ni wrote: »

Hello All,
I am bit new to this forum, apologies if discussed before,
If you are making over payments to your mortgage, is it better to reduce monthly mortgage payment or decrease term.

Regards

There are two types of mortage, first you are at fix and second one reducing mortage process,Both condition make sense that How would like to pay for monthly mortgage payment with reducing remark terms. i do not know what type of morgage have you taken and how much pay for it in monthly.

doc_ni

I have tracker mortgage, thanks to all post, I feel I have fair bit of idea better to overpay and reduce term, should have done long time back. Better late than never!!!