Over Payment -Reduce Cost or Period?

stanleymog

Hi,

Me again, as I am about to start making over payments on my mortgage, I have the chance to either reduce the period the mortgage is over or the amount owed.

When I was in a position to do this before I reduced the amount owed and wondered if this was the best way to go again?

Thanks again in advance.

Jonbvn

stanleymog wrote: »

Hi,

Me again, as I am about to start making over payments on my mortgage, I have the chance to either reduce the period the mortgage is over or the amount owed.

With over-payments you will always reduce the capital owed. However, you can either reduce the term or you can reduce the regular monthly payments.

IMHO, it is better to reduce the monthly payments, but still keep paying the original higher amount. The reason being that if you have any problems (unemployment etc.) you would not be committed to paying the higher monthly amounts.