Overpaying - shorter term or lower payments?

billa_champion

Hi all

I am not planning on staying in the current property for the full 25 year term - am probably looking at a max of 2-3 years before I upgrade. So, given this scenario, does it really matter whether my OP reduces the term or the monthly balance?

Lokolo

Reducing the time means your original repayments do not reduce so you are paying more off each period in comparison to reducing payment amounts (unless you are overpaying to match what your original repayment was, in which case, it doesn't matter)

billa_champion

Thanks. That's what I thought. I basically pay £1000/month but the monthly payments are going down so am I not paying off more of the capital each month? Or am I being too simplistic here?
So you think I should just leave the mortgage as is and not bother to ask them to reduce the term as, like I said, I intend to move. It would be different if this was my forever home.

TrickyDicky101

If your total repayments each month remain £1000 then it is irrelevant e which option you go for as the economic effect is the same