Advice needed please?

financiallyfreewanabe

Hi all, I'm just about to pay the 10% allowance of my mortgage but heard Martin say briefly on a recent program to always reduce the term not the monthly payments. I'm a bit confused because I've been reducing the monthly payments every year I pay my 10% so I have more disposable income each month but now I'm reconsidering. I'm working towards being mortgage free asap.

My situation:
Fixed 3.39% mortgage with Santander until Oct 2019
£26,316.52 left paying £189.13 per month.
Term: 14 years 8 months left

I have a small income so I would be ok to pay up to £200 a month again to pay it off quicker if that's the best way otherwise if it makes no difference I'd rather pay less each month.

What would you do?

Cheers in advance for advice :beer:

Ignore my signature. I can;t figure out how to edit it... :-/

pennystretcher

I'd pay the 10%. and I wouldn't change the term, there is usually an admin fee to do that...

beanielou

It's really up to you.
Do you want to pay mortgage off quicker or have more money in your pocket.

MM10

To be mortgage free as soon as possible you have to reduce your term with the overpayments.
Check if there is a charge to do this and if there is ask the banks if they can waive it.

Viking_mfw

Although if you're in a fix til October 19, you can just keep overpaying as you have been and when you refix shorten the term. Having more money per month til then allows you to overpay each month or if you've done your maximum, to save it for the end of the fix and pay am extra sum when shortening the term.

Rolandtheroadie

Remortgaging just now, had been overpaying £200 per month for a while now.
As we're used to paying it, I looked at reducing our term. With a better deal now, we've reduced the term by 5 years (down to 8 years), and will be paying £50-£60 less than we were before, including the over payment.
Hoping to then overpay again, target to be MF by my 50th, in 6 years.

Edit. I'd read the £200 wrong, thought that was an over payment.
I'd still probably go down the same route though, reduce the term if affordable in October 2019, then overpay on top if able to.

A_Frayed_Knot

Viking_mfw wrote: »

Although if you're in a fix til October 19, you can just keep overpaying as you have been and when you refix shorten the term. Having more money per month til then allows you to overpay each month or if you've done your maximum, to save it for the end of the fix and pay am extra sum when shortening the term.

I agree with Viking_mfw - as above, exactly what I would do/have done.


With an addition of asking Santander what the penalty would be if you re-mortgaged just now, then calculate what the saving would be with your new interest rate in your new deal, using your lower term years plus your new payment figure (eg £200.00).