Reduce number of years or overpay?

papi34

Hi

I'm currently about to come the end of my current deal. I can get a 3 year fix with Nationwide at 3.99% without any fees.

My question is hopefully a simple one. Generally is it better to reduce the number of years left to pay or continue to overpay? (which provides flexibility with the total paid)

I currently have 18 years left and if I was to fix and continue to overpay at the same amount each month, the the total I'll be paying off will be the roughly same for the fixed amount with 13 years left.

papi34

Actually, I've found the mortgage calculators on this site and these have probably answered my questions!

Jonbvn

IMHO, it is better to leave the term of the mortgage the same and overpay.

The reason? Quite simple really. If you reduce the term you are locked in to making higher payments. This could be a issue if you have any problems such as redundancy or illnes etc. With overpaying, you can stop anytime you want.

yvonne_alan_joshua

I was able to reduced the term when i fixed on a new deal but kept the payments the same, telling myself i was used to paying that amount anyway, and if i hadn't not sure the extra would have been used to pay the morgage, i would always find something else instead of overpaying doing it this way i have now knocked eight years off my morgage its personal preference:)

adwat

Hi, I've overpaid by as much as I could afford and reduced the term (rather than reducing the payment), it's the most efficient way of repaying a mortgage - unless you're earning more in interest from saving the overpayments. At the moment you're unlikely to earn more from savings than you are by paying off your mortgage.

GavB79

You answered your own question - overpaying gives you flexibility.