overpay or reduce term?

dr1_2

i have a client who has asked me what would be best:
a) take his 90k remortgage over 21 years or
b) take it over 30 years and then overpay each month to reduce the capital

he wants a 10 year fixed rate, and wants to know what option would be best at the end of the 10 years
I think he would be best to take it over 21 years so that he pays less interest

cheers all
dr1

InMyDreams

A client? Hopefully in some other field than mortgage advice! ;-)
If he was going to go down route b) and make the overpayment match what the route a) payment would have been anyway, then all other things being equal (and no penatly for overpayment) there will be no difference at all after 10 years. He will have paid identical interest and have an identical outstanding balance at the end of 10 years. What he does after that is up to him.

The main difference is that taking over 30 years will leave him more flexible with how much he overpays (or doesn't). That can be an advantage or a disadvantage depending on how you look at it. The more he overpays, the less interest paid in the long run, the less he overpays, the more interest.