Which is best: overpay or reduce term

Mike_Royle

Just about to remortgage and will pay off a chunk when I do. My question is if I keep my mortage payments at the level I pay now, will it be cheaper over the next 3 yrs to a) leave the term as it is (happens to be 18 yrs) and overpay to hit what I sued to pay, or b) shorten the term to 14 yrs.

I need a tool to help me calculate this - can anyone help? Hope this makes sense to someone out there!

Thanks, Mike

tomstickland

If you reduce the term you'll have to pay more per month anyway, so it'll be the same as overpaying.

Mike_Royle

Thanks - I guess I should have asked which option will pay off the most capital as no doubt they will be two different outcomes even if by a small amount.

UK007BullDog

You need to remember your affordability. If something happens and you are no longer able to meet the committments of paying the mortgage at the higher rate, if you reduce the overall term of the mortgage. Also then you are not able reduce the monthly payments. I would only recommend this if you have been overpaying comfortably for at least a year.

Otherwise stick to your regular rate and continue overpaying.