Shorten Term or Take Lower payments

mcpitman

Afternoon,

Hopefully a relatively simple one to answer.

Current payments on a 2 yr fixed ending in April2018 are £605pm

Can look to get a new deal with same lender for £480pm on the same term, or shorten term by 3 years and pay around £600 again.

What would you do?

If I reduce the term, whilst the payments are manageable and comfortable (at £600 PM), if something ever changes in the future for the worse I am then committed o these payments.

Or do I keep the term the same, save the additional off monthly and pay it off as a lump sum next time renewal of fixed deal is up?

Logic behind that is it is a liquid asset that can be withdrawn if the car goes bang or other life events cop up.

Your thoughts would be appreciated.

AnotherJoe

Take the more flexible £480 option. Save the £120, and, you should be able to make a small amount of money doing it that way since unless your interest rate is dire, savings rate should be > mortgage rate.