Paying off Mortgage

jasmin10

Question.

I am making regular monthly overpayments on my mortgage to reduce the term and managed to this when my tracker mortgage came up for review last November. I reduced it by two years so the term is now 25 years instead of 30 and come down from owing £115k to £96k

Just had a thought. would I have been better off keeping the term at 30 years as surely the longer the term I have my mortgage the lower interest I am charged. For example.

A quote from the Nationwide website. A mortgage of say £80k, over 20 years costs £544 per month. whereas over 25year £499 per month and over 30 years £429 per month.

Obviously the amount borrowed will be lower each time the mortgage review comes around thus giving a lower monthly rate. So if I just make sure that I continue to make the maximum overpayments I am allowed I will end up having a mortgage at 30 years but for say only 15k and being v.v low and perhaps paying off in one go at the last review?

Is this clears as mud ????? took me a while to understand sorry - what do you think?

jasmin10

any ideas?

Mr_T_7

You would actually pay more interest. The payments are lower over 30yrs because you are repaying the loan amount over a longer period. The interest is the same each month whether 25yrs or 30yrs, but if 30yrs you are paying the interest for 5 more years hence costing you more.