Confused!

fruitloop04

Hello, Sorry if this is a repeated question.

I have remortgaged and asked to slightly overpay each month and asked the overpayment to be taken off the mortgage term. My new mortgage provider said I can't do this and if I overpay then they will recalculate the balance to make it the same term. I don't really understand what this means. Is it still worth me overpaying or is there no financial benefit if they won't take it off the term and will just recalculate after a year?

Thanks!

[Deleted User]

As long as you keep overpaying, you will pay less interest.

muhandis

From the point of view of how much interest you save, there is no difference between shortening the mortgage term or overpaying while keeping the same term. They do exactly the same thing.

If you find that hard to believe, listen to Martin Lewis explaining why.

https://www.moneysavingexpert.com/news/2015/03/decrease-the-term-or-overpay-my-mortgage-martin-lewis-answers/

fruitloop04 wrote: »

Hello, Sorry if this is a repeated question.

I have remortgaged and asked to slightly overpay each month and asked the overpayment to be taken off the mortgage term. My new mortgage provider said I can't do this and if I overpay then they will recalculate the balance to make it the same term. I don't really understand what this means. Is it still worth me overpaying or is there no financial benefit if they won't take it off the term and will just recalculate after a year?

Thanks!

fruitloop04

muhandis wrote: »

From the point of view of how much interest you save, there is no difference between shortening the mortgage term or overpaying while keeping the same term. They do exactly the same thing.

If you find that hard to believe, listen to Martin Lewis explaining why.

https://www.moneysavingexpert.com/news/2015/03/decrease-the-term-or-overpay-my-mortgage-martin-lewis-answers/

That makes sense - thank you!