overpayment or shorter time; which is best?

bubblegum1985

Evening all,

I am about to remortgage and currently have 29 years left on my mortgage. I can definately reduce to 22 years, but if I stretched myself I could reduce this to 17 years.

Is it better to go for the 22 years (with the safety of lower payments should I come into payment difficulties i.e. loosing job) and overpay or just go for the 17 years?

Does it make a difference to the overall mortgage balance?

Thanks

katejo

bubblegum1985 wrote: »

Evening all,

I am about to remortgage and currently have 29 years left on my mortgage. I can definately reduce to 22 years, but if I stretched myself I could reduce this to 17 years.

Is it better to go for the 22 years (with the safety of lower payments should I come into payment difficulties i.e. loosing job) and overpay or just go for the 17 years?

Does it make a difference to the overall mortgage balance?

Thanks

How do you come to have 29 years on your mortgage? Most mortgages are 25 years or less. Reducing to 17 years might make a big difference to your payments and you can't count on interest rates staying as they are now. Use a mortgage calculator to work out how much you would have to pay monthly if the interest rate were 6-7% again.

bubblegum1985

Thanks katejo, I had a 35 year mortgage to start with which is why it is so high.

I am able to overpay my mortgage about £400 a month, and I have worked it out that if my interest rate increased in 3 years time then the increase would swallow the overpayment but I still could afford it.

I have been playing around with the mortgage calculators but cant seem to work out if its better to have lower years or just overpay.

Thanks

michelle2008

If your deal allows it you could keep the longer term but still overpay. This would in effect mean the mortgage would be paid off much earlier - but if your circumstances change you can drop to the minimum.

Interest rates will go up - it is much better to simply reduce your level of overpayment in response than have to find extra money every month

Bluemeanie_2

michelle2008 wrote: »

If your deal allows it you could keep the longer term but still overpay. This would in effect mean the mortgage would be paid off much earlier - but if your circumstances change you can drop to the minimum.

Interest rates will go up - it is much better to simply reduce your level of overpayment in response than have to find extra money every month

Agreed. This is what I have done. Started with a 35 year. When I remortgaged I went to 30. Have overpayed so much I could reduce it to 24 years but have decided to keep it over it's present term in case circumstances change and just keep overpaying!

getmore4less

bubblegum1985 wrote: »

Thanks katejo, I had a 35 year mortgage to start with which is why it is so high.

I am able to overpay my mortgage about £400 a month, and I have worked it out that if my interest rate increased in 3 years time then the increase would swallow the overpayment but I still could afford it.

I have been playing around with the mortgage calculators but cant seem to work out if its better to have lower years or just overpay.

Thanks

Term is irrelevent.

The thing that matters is the payment.

Alway go for the longest term lowest payment possible taking into account the overpayment liimits.