Remortgaging - unsure of best approch

soot123

Hi, I am remortgaging rigth now for the first time since buying my first home a couple of years ago. I am going to be moving onto a much better rate that Ihave been on, but now I am unsure which of these two approaches is better (or indeed if there is any difference!):

- I can leave monthly payments high at current levels and take years from the term, or
- I can reduce the payments by over £100 a month, I would most likely then make over payments up to the current level. This gives me flexibility, but will it have the same impact on the term?

If anyone understands just how overpayments work advice would be great - I am not sure if overpayments would pay off interest or capital or both at the same rates as my usual payments.

thanks!

lee111s

Yes it would net the same results. However many people say they will overpay but never do and get used to spending the extra "£100". If I were you and you can afford to, keep the payments the same.

Thrugelmir

The overpayments made will reduce the amount of capital you owe. Which will result in a lower amount of interest being charged.

Don't expect instant results. To make serious inroads into your mortgage balance be prepared to make overpayments for an extended period of time. As the compounding effect that makes the difference.

With interest rates likely to start rising again in the not to distant future. Now is the time to be overpaying. As will save you even more money in the longer term.