Extend the term but over pay more? 20 April 2016 at 6:18PM edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe 4 replies 767 views

jollyjacko1979

Hello,

My Wife and I are about to apply for a new mortgage as our current 2 year deal is coming to end. We have been able to over pay by a couple of hundred of a month for the past 6 months and intend to to keep doing so while we can afford it.

My question is.. Is it better (in terms of paying off the mortgage quicker) to take a 23 year mortgage and carry on over paying like before OR take another 25 year mortgage with a lower monthly amount but then be able to over pay more a month?


In summary, is it a good idea to extend the term of a mortgage by a few years to get a lower monthly payment then over pay by a larger amount?

I hope that make sense!

Thanks in advance!

A_Frayed_Knot

Works out the same, but depending on your mortgage total, may be restricted to total o/p's in the year.

jollyjacko1979

Thanks for the reply,..

I am not so sure though, I have been trying to use the MSE over pay calculator and I think extended to 25 but overpaying more would pay it off a little quicker but would cost more?

It's all a bit confusing!

pollyanna24

I agree with the other person who replied to you. It makes no difference.

The more a monthly payment you can make will make the mortgage go quicker, not whether more or less of that payment is the regular monthly payment as opposed to it being an overpayment.

A_Frayed_Knot

jollyjacko1979 wrote: »

Thanks for the reply,..

I am not so sure though, I have been trying to use the MSE over pay calculator and I think extended to 25 but overpaying more would pay it off a little quicker but would cost more?

It's all a bit confusing!

You might o/p more but you would be paying less mortgage

example -
a)Mortgage payment 400.00 plus o/p 200.00 = 600.00 per month OR

b)Mortgage payment of 200.00 plus o/p of 400.00 = 600.00 per month

Which pays the bill/mortgage quicker - a) or b)