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Whats better?

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
5 replies 829 views
DazthedriverDazthedriver Forumite
2 Posts
edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
Hi everybody!
long time watcher, first time poster..
after some advice..
Whats better?
overpaying on your existing mortgage product...or..
Going for a new product that includes the overpayment but brings down the term of the mortgage?
Any ideas would be welome.

Replies

  • spadooshspadoosh Forumite
    8.7K Posts
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    I chose the latter because a lack of self control. Many on here prefer the former as it gives you more flexibility.

    If the amounts you are paying are the same for both, the amount repaid is exactly the same. If you do go with the first option ensure you dont contravene any restrictions on overpaying (typically a max over payment per year of 10% of the mortgage).
  • I keep changing my mind daily but at the moment, based on the best rate I can see today I'll be moving to a new product in February and taking 2 years off the term. My monthly payments will be same as I am paying now and have been for the last 5 years.

    I guess down to personal choice but at least this way I can see term physically drop. I do plan on over paying too.

    My biggest concern is will the rates change and will I get the deal(s) in January/February that I can now. How will Brexit effect me etc....

    Good luck
    Regards,
    Dave

    If only I had a pound for every time I used the thanks button :D
  • pollyanna24pollyanna24 Forumite
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    I would overpay. That way if things go wrong, you are not stuck with the higher payment.

    Apparently, it's not that easy to change the term back if you find you need to at a later date. And you might have to pay for it. I extended one of my mortgages by 5 years and had to pay £25 to do this.
    Pink Sproglettes born 2008 and 2010
    Mortgages (End 2017) - £180,235.03
    (End 2018) - £169,999.96
    (End 2019) - Target £160,000 DID IT!!! (159,906.64)
    (End 2020) - Target £147,500. £146,215.25 DID IT!!!!
  • My existing product ends next year so. I'm going to delve deeper into it in the new year.

    Ideally I would rather bring down the term time if i can find a product that guarantees the payments until the end of the term. I've had a look and the Coventry BS do a product like this but it's over a thousand pound to set up.
  • getmore4lessgetmore4less Forumite
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    There are only 4 variable to a mortgage
    Amount borrowed
    interest rate
    contractual term
    payment

    You only need 3 to work out the other one

    to get the costs down you borrow the smallest amount you can, on the lowest rate you can, for the shortest time you can.

    For a given rate that is determined by the payment a bigger payment means you are borrowing less for the rest of the term.

    what are they for the current mortgage?

    What's the biggest regular payment you are comfortable with.
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