Overpay Question

hufc2002

Payment's didn't reduce. The direct debit amount was the same each month.

AnotherJoe

hufc2002 wrote: »

Payment's didn't reduce. The direct debit amount was the same each month.

Well then, your term has reduced if you want it to.You are in a very good and flexible place.

FWIW you could still keep that original term by stopping the overpayments and asking the lender to reduce the DD to match the term. Which you might do if for example you got into financial difficulties.

Otherwise if they officially reduced your term to say 20 years from 25, suppose you fell on hard times and needed to reduce your payments to keep afloat, you wouldn't be able to. So dont be phased by them saying the term is X years, thats the theoretical term length.

TheShape

AnotherJoe wrote: »

Well then, your term has reduced if you want it to.You are in a very good and flexible place.

FWIW you could still keep that original term by stopping the overpayments and asking the lender to reduce the DD to match the term. Which you might do if for example you got into financial difficulties.

Otherwise if they officially reduced your term to say 20 years from 25, suppose you fell on hard times and needed to reduce your payments to keep afloat, you wouldn't be able to. So dont be phased by them saying the term is X years, thats the theoretical term length.

This!!!

I think Martin's advice to reduce the term is oversimplified and ignores the benefit of reducing your 'minimum' monthly payments. Most mortgages allow you to overpay a certain amount and some allow unlimited over-payments. Overpaying if/when you have the money or reverting to your lower monthly payments if circumstances make it necessary gives you a lot of flexibility.

BoxerfanUK

AnotherJoe wrote: »

Well then, your term has reduced if you want it to.You are in a very good and flexible place.

FWIW you could still keep that original term by stopping the overpayments and asking the lender to reduce the DD to match the term. Which you might do if for example you got into financial difficulties.

Otherwise if they officially reduced your term to say 20 years from 25, suppose you fell on hard times and needed to reduce your payments to keep afloat, you wouldn't be able to. So dont be phased by them saying the term is X years, thats the theoretical term length.

That's exactly what we do. The term remains the same and we pay the same total monthly payment (including overpayment) Each month, due to the overpayment, the basic monthly payment REDUCES and in effect the overpayment INCREASES. Yes the term does remain the same but the effect of the overpayments in our case will in a few short years time render the basic monthly payment a pittance and we will be able to just pay the thing off early with a lump sum payment.