New Mortgage - Overpayment Help

getmore4less

The reality is what matters is the total payment.

Reduce payment/reduce term come into play when you are maxing out your overpayments.

I don't think any lender really reduces the contracted term it is just a way of saying keep the contractual payment the same.

Boredatwrork

If you want a short answer, don;t reduce the term stick to overpaying until you are at the point that you will incur overcharging from overpaying too much (check your bank, for many its 10% of your mortgage), if you do get to that stage, then and only then (as long as there are no other factors involved), should you look inot reducing the term.

Don't reduce your term, the reason being this will bring your monthly up each month and if you suddenly find you are struggling in the future you won;t need to find that extra money each month.

Reducing the term means you pay less overall and is paid faster which sounds good, and is good, however by over paying each month (so the maxiumum you would pay is the same). It has exactly the same effect, the only difference as I stated is that in future if you suddenly can't afford the extra, you can stick to your smaller regular payments, thus somewhat safeguarding yourself.

Rom

Thanks for that summary.

Its 10% max overpayment, which is a bit over £18k for me. Which I won't be doing unless my life drastically changes!

I'll be opening a 123 account, so with any luck, the overpayment might count towards the cashback too! Though I doubt it.

Thanks again to you all for the input. I will go with over paying, reducing the monthly payment due. But continue to pay a flat £900.
With a bit of luck, I'll hit my 90% ltv target with out having to put anymore money in.