Overpayment - confusion after reading Martin's article

xyz123

hi - I am in a fortunate position to make a lumpsum overpayment to my mortgage. I also overpay every month by a small amount.

At the time of making lumpsum overpayment (within allowance) i have two choices: Reduce the term or reduce the payment.

I read Martin's article
https://www.moneysavingexpert.com/news/2015/03/decrease-the-term-or-overpay-my-mortgage-martin-lewis-answers/

and it said "If your mortgage provider alters your repayments to keep the term the same, although it will boost your monthly disposable income, you won't save on your interest payments, and the lender will earn more."

I am thinking does it actually matter provided you keep paying in extra?

Say my mortgage payment is £800 and i overpay by £200 every month, so total of £1000. So say after overpayment, mortgage payment is reduced to £750 but as long as i keep paying total of £1000 in mortgage account, i will clear the mortgage much earlier than original end date and then there is no question of lender earning more?

I am in the lowest LTV and i am unable to get a better saving rate in bank than my mortgage rate. I have got rainy day money stashed away so i am looking for an answer purely from the mortgage point of view.
Thanks

kingstreet

xyz123 wrote: »

Say my mortgage payment is £800 and i overpay by £200 every month, so total of £1000. So say after overpayment, mortgage payment is reduced to £750 but as long as i keep paying total of £1000 in mortgage account, i will clear the mortgage much earlier than original end date

Yes. That is correct.

Tom99

Your new overpayment will then be £250pm but providing that is still within your penalty free overpayment limit it will still be paying off the capital at the same rate whether your due payment was £750/£850/£1,000pm.