overpaying more than 10% a year

dimbo61

again you miss the point " want2bmortgage3" as you will still be paying the mortgage for the next 25 years !!!!
Now if you keep your payment static and overpay a " TINY " bit more every month you clear the mortgage early and save £££££ in interest.
Like most people I pay the same amount every month £1250 mortgage payment, gas bill, electric bill, council tax etc
If and only IF my world is falling apart and I lose my job/get the sack/ fancy retiring early I have the option of paying a much smaller mortgage payment every month

Morgage_Confused

edited for clarity....

How do you have an option to pay smaller monthly payments as you have requested the bank to reduce the term, thus fixing your payments higher?

want2bmortgage3

that's what i was thinking, and why i requested a lower payment instead of shortening the term.

with jobs so uncertain at the moment, i'd rather my payments gradually reduced with overpayments, instead of committing to a higher payment and not being able to change it.

Morgage_Confused

no no....by overpaying YOU are reducing the term not the bank. This is completely reversible as theres no contractual changes involved.

By requesting a term reduction the BANK is reducing the term and fixing your payments higher. May not be so easy to change back.

In your case I'm pretty sure what you want to do is overpay and request the bank keeps your monthly payments the same. This way if hard times hit you can drop down onto the lower payments easily. You have no commitment to hold these payments higher. If you request to reduce your payments then you are holding the term fixed at say 25years.

dimbo61

My original FIXED term was for 5 years Hence the 10% max overpayment per year.
Now by paying £50 I reduced the term and for £50 I can also set the term back to its original length.
I want rid of the mortgage asap and I want to give the bank as little interest as possible
Have you read the paperwork that you got with your mortgage offer?
EG mortgage of £125K over 25 years at 4% means you pay back £100K in interest so £225K in total.
Pay it off over 10 years and you save over £50K in interest