reduce term or reduce payments?

stedwell

Hi
Just a quick question!
At present I have my overpayments set up so that the term of my mortgage is reduced. I am very pleased with this as in 9 months I have knocked off 4 months of my term of 12 years. :j
However I have ben tempted to have the amount I pay each month reduced instead as this would mean I could make bigger overpayments with the amount I save.
Is either way better?
Thanks

adwat

What you're doing is best. If you reduce the payments you'll end up spending the difference, and if you intend to use the difference to make overpayments anyway...

mirry

we have lowered our monthly payments to feel the benefits now
(if needed).

Yet at the same time, it allows us to over pay more each month while
we can. I personally wouldnt do it any other way , it acts as a insurance for when times are hard, yet achieves exactly the same thing,
the mortgage paid off early.:D

rlc22

mirry wrote: »

Yet at the same time, it allows us to over pay more each month while
we can. I personally wouldnt do it any other way , it acts as a insurance for when times are hard, yet achieves exactly the same thing,
the mortgage paid off early.:D

This is what I would do. As long as you're disciplined and don't spend the difference on other things then it's effectively the same thing

alex_p

I do a mixture. I overpay and reduce the monthly payments usually. When they get way too low I reduce the term.

babybakey

ok now im confused how would reducing the payments and then using what youve saved make any difference to what you usually paid? what am i not getting? i know reducing the term would help but how does reducing the payments ? surely it just makes the term longer ?

Pennypincher2

Hello Stedwell,
How are you doing? Gosh is it just me or has this month gone on forever?

We have on this and the last mortgage shortened the term (the last mortgage took it on our existing time frame and this most recent one extended by 4 years because that was the max we could afford but didn't go longer). So we pay loads as took extra £70000 on 11 years and aim to over pay £160 per month to start with but it may not be possible. Do what feels right and you will be fab.

Byee

stedwell

Thanks for all your replies. I was hoping that the interest reduction would be the same whichever route I choose. I am reducing the term at the moment but the overpayments are coming from money I recently inherited. Soon I won't be able to afford to do that and I was wondering if it would be better to reduce payments instead, particularly as my eldest will then be at uni and we will be living on bread gruel and walking everywhere!:o

Hello to PP2. Funnily this month is flying by but then work is so busy. Have just been out this evening on a rare midweek visit to the pub with girlie friends and feel very carefree and daring!