Need Some Advice Mortgage For My Parents !

mug2k

Hi

My Mum and Dad are going for a new house with a mortgage of £160,000. There gonna put £16,000 down as the deposit so that leaves £144,000. They have two idea's :-

1. Repayment : £916 a month over 25 years
2. Interest Only : £703 a month and over pay by £300 a month

First option seems pretty good because you can you overpay and if its a decent amount every month it should knock a few years off the mortgage.

Second option to me looks ridiculous, £703 is just paying the interest. Overpaying by £300 a month equals £3600 a year knocking down the mortgage. By my calculations paying £3600 a year will take 40 years to pay the mortgage. Correct me if I'm wrong

So basically if you have any suggestions or ideas I'd love to hear them as it as pretty big decision to make.

Thanks,
marcus