shorter term or overpayments?

paul121_2

Any guidance would be much appreciated to what might seem like a very simple query!!

I am purchasing a new property - priced at £265000. I will be applying for the First Direct life tracker at 1.79 above base with a deposit of £145000 - leaving £120000 on mortgage.

This is my query. Would it be cheaper in long run to put mortgae over 10 years at cost of £1130/month and make no overpayements. Or if I take mortgage out over 15 years at £795/month and make overpayments at the difference between the 2 monthly payments which is £335 - would the two deals end up costing the same?

I apologise if this is such an obvious question, but I really cannot get my head round it!! Any suggestions on +'s or -'s?

cheers

getmore4less

They should end up the same.

lower mandatory payment gives more flexability ie you can miss an overpayment.

For a slightly increased cost you can increase this flexability by going offset.

paul121_2

Thanks Getmore.

how would an offset benefit - does that take into account my savings, which would be about £40000.

Cheers

getmore4less

If you have saving earning a pitance then the offset might work in your favour.

but if the savings are in ISAs then FD does not have the ISA offset option, acouple of other lenders do but their deals have not been as good as FD.(not checked recently)

The advantage without savings is that you can access overpayments without asking for the money back.