Advice please

Thrifty_Phil

Hi
Hope someone can give me some advise please.

I currently have a Fixed 70K mortgage till November 2008.
Its for 15 year period

I'm with first active and have the ability to over pay 10% of the total sum each year.

I've now saved up enough to be able to over pay 7K for this year but when i called first Active and said i wanted to overpay i recieved the letter below which I'll quote

"I can confirm the monthly repayments will remain the same. However if there is a change to interest rates or your deal comes to an end, we will automatically recalculate your monthly payment. This will then mean you will repay the outstanding balance over the remaining term of your mortgage account, in line with your original agreement.

Any overpayment that are credited to your mortgage account will reduce your capital balance rather than reducing the term. This means that the interest being charged on your mortgage account will reduce in line with you new capital balance."

A few questions

I'm happy with repaying the same monthly amount but will the early repayment sum reduce the amount of interest I pay on the monthly figure (£540)

Or do they mean that at the end of the fixed period they will recalculate the mortgage based on the outstanding amount then?

Is this the best wat to reduce the mortgage or are there other better alternatives??

Thank you for reading

Phil