Paying of mortgage - reduce interest or reduce term?
in Mortgage-free wannabe
4 replies 923 views
I have just paid in a fairly substantial cash sum into my mortgage (Approx 20% of the outstanding sum). However, I am baffled by the choice offered me to reduce monthly payments or reduce the term. Most advice online indicates that both will happen, but with Nationwide you have to choose one or the other. A slight complication is that we are also overpaying a couple of hundred a month and want to continue to do this. I don't entirely see the point of reducing the term. Unless the impact of the payment is really substantial, the liklihood is that we will sell the house and clear the debt before the term is up anyway. But if we choose reducing the monthly payment this will interfere with our desire to continue overpaying monthly. Am I missing something? Is there a benefit to reducing the term even if we are likely to sell and possibly downsize before the term is up anyway?
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