Overpayment - reduce monthly payments or loan term?

INSPIRED

Our mortgage is split between Repayment and Interest only.

At the end of April the mortgage had 8 yrs to run and the interest rate, at present, is 3.75%.

This month, we have paid in the proceeds of an endowment policy and asked for the funds to be credited to the Interest only sub loan.

We do not want the monthly payments to change as they are affordable.

Building Society now says that we need to reduce the term of the mortgage to 7yrs 3mths if the monthly payments are to stay the same. We must pay £35 fee for this.

I was positive that we are doing the right thing but, now, am having doubts. Retired, no debts apart from mortgage, ISAs maxed out: surely we should be throwing everything we can at the mortgage? In 2016 we will need to remortgage and there is a possibility that no mortgage lender will take on the interest only portion of our mortgage - so we have been advised.

Hope someone can put my mind at rest?

Many thanks.

INSPIRED

Have I posted this to the wrong thread?

We are MFWs; just not certain that we are making the correct decision. I have read so many posts about paying off a mortgage but have seen nothing about reducing the term.

Are we taking the sensible route?

Many thanks.

SG27

INSPIRED wrote: »

Have I posted this to the wrong thread?

We are MFWs; just not certain that we are making the correct decision. I have read so many posts about paying off a mortgage but have seen nothing about reducing the term.

Are we taking the sensible route?

Many thanks.

This area of the forum mainly has people's diaries which I think is a shame as there is a lot to discuss regarding being a MFW!


If you repayments are currently affordable I would be looking at reducing the term. And as you say it may be difficult to remortgage the IO part paying this off is a good idea!


Seeing as your ISA is maxed out I would personally put all savings for the rest of this financial year into the mortgage!

INSPIRED

SG27 wrote: »

This area of the forum mainly has people's diaries which I think is a shame as there is a lot to discuss regarding being a MFW!


If you repayments are currently affordable I would be looking at reducing the term. And as you say it may be difficult to remortgage the IO part paying this off is a good idea!


Seeing as your ISA is maxed out I would personally put all savings for the rest of this financial year into the mortgage!

Many thanks SG27.

That reassures me that we are not missing some glaringly obvious alternative.

:T