regular overpayments vs lump sums

evosy1978

hello all

ive just done some number crunching on https://www.whatmortgage.com. (overpayments)

30yr mortgage at 5.39% = £560
35yr mortgage at 5.39% = £529 + (overpayemt of £31) = paid of after 30yrs.

sorry i no this must sound obvious, but it didnt at first to me. I actually thought you would say more money in the long run doing it the overpayemnt way.

so really its best just saving the overpayement money in a high interest account and then paying a lump sum when your ready.

can some1 confirm if this is correct.

thanks

Andy_L

No.
It's only if you overpay the mortgage & shorten the repayment term that you save money.
ie in your example overpay the 30yr and pay it off in, say, 25 yrs, then you pay out less money.