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Remortgage - Overpay or Reduce Term

edited 30 November -1 at 1:00AM in Mortgages & Endowments
2 replies 306 views
stu2500stu2500 Forumite
156 posts
Eighth Anniversary Combo Breaker
edited 30 November -1 at 1:00AM in Mortgages & Endowments
Apologies if this has been covered before but, I'm coming up for remortgage soon on my Natwest mortgage and I am keen to pay it off as quickly as possible. We originally took the mortgage out for 25 years and pay £591 per month. Looking at rates available (I understand these aren't guaranteed but hypothetically), we could remortgage at a 20 year term and the payment would be circa £540 per month (we would over pay the extra £60 available to us as well).

Is it best to reduce the term further or just overpay the extra monies we have? Or, does it make little difference?

Replies

  • spadooshspadoosh Forumite
    8.7K posts
    Ninth Anniversary 1,000 Posts Name Dropper Photogenic
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    In terms of cost it makes little difference providing you dont exceed any over payment limits.

    The general rule is make the monthly mortgage payments as cheap as possible so if circumstances change youre not comitted to the higher payments.

    For me personally i went down the reduced years option because im not the kind of person to arrange and ensure over payments are made each month and i would inevitably find something to spend the money on instead.

    Depends on how you manage your finances really, if youre organised and have control go for the overpayments, if youre forgetful and can be led by gluttony tie yourself to the higher costs (try and account for as many changes in your circumstances as imaginable)
  • stu2500stu2500 Forumite
    156 posts
    Eighth Anniversary Combo Breaker
    spadoosh wrote: »
    In terms of cost it makes little difference providing you dont exceed any over payment limits.

    The general rule is make the monthly mortgage payments as cheap as possible so if circumstances change youre not comitted to the higher payments.

    For me personally i went down the reduced years option because im not the kind of person to arrange and ensure over payments are made each month and i would inevitably find something to spend the money on instead.

    Depends on how you manage your finances really, if youre organised and have control go for the overpayments, if youre forgetful and can be led by gluttony tie yourself to the higher costs (try and account for as many changes in your circumstances as imaginable)

    Thanks for that. I think I'd prefer the reduced years as i then have no option to not overpay, or I then can't forget to overpay. We have rainy day savings and such, therefore I'm not concerned about not being able to afford monthly payment etc.

    Thanks again.
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