Is it worth decreasing the mortgage term years? I already do overpayments

LiveOnce

Hi all,

Is it worth decreasing the mortgage term years on my property?

How can I calculate if this is right thing to do right now?

E.g. I have a 25 year term mortgage. I overpay by £10,000 a year currently and have £110,000 left to pay on my mortgage.

I am trying to understand if reducing the mortgage years is wise or not.

I am thinking maybe I should keep it to 25 years in case something bad happens and I am short on money.

Can anyone help explain to me please?

getmore4less

There are only 4 variable to a mortgage and you only need 3 to determine the 4th

what decide how long it take are the 3 critical ones,
how much you owe.
the interest rate.
how much you pay.

You can ignore term as all that does is set a contractual payment after that it is irrelevant

The payment determines how long it takes

daveyjp

Once its paid its paid, how long is left following the final payment is of no consequence.

Depending on the mortgage the overpayments may be classed as 'savings' enabling you to draw them back at a later date without affecting the mortgage end date.

JamesFuller

Many thanks getmore4less and daveyjp

daveyjp could you please explain more about 'savings' aspect you mention? Are you suggestion the mortgage provider can give that money back to me if I needed it?

daveyjp

Depends on the mortgage you have, but they are often called fully flexible, or offset mortgages.

When I paid mine off I had the option of keeping the mortgage account open with zero owing but a credit always available to draw down, as long as any debt was paid back by the mortgage end date.

IAmWales

JamesFuller wrote: »

Many thanks getmore4less and daveyjp

daveyjp could you please explain more about 'savings' aspect you mention? Are you suggestion the mortgage provider can give that money back to me if I needed it?

Why are you posting under two different names?

JamesFuller

My apologies I had been wondering about the same thing and found the replies useful. Didn't mean to hijack the thread, sorry.