Reduce term or overpay on a longer term?

CG2017

Hello everyone,

After having all of our debts paid apart from our mortgage, we are now looking at how we can get our mortgage paid off quicker. We would like to aim for 6 years - this is by the time our youngest starts secondary school. Our existing mortgage ends in March so we can start looking from December but I am trying to workout what is best for us if we had a 6 year goal in mind...

Current mortgage is £95,000 at 1.65% fixed, LTV 56%

Do we just try and get the best deal based on our current term which is 19 years and look at making over payments, or, reducing our term to the 6 years?

Thank you in advance for any guidance

Thrugelmir

Depending on the mortgage product you select. There maybe restrictions on the amount you can overpay on an annual basis, i.e. 10%. Reducing the term is therefore probably your better option. Though six years would leave you little flexibility should circumstances change.

CG2017

Very true about the flexibility aspect, I think I will need to sit down closer to the time and do some sums, I may reduce the term but not by as much as 6 years? Thank you for your input

Brodiebobs

It would depend on your attitude to risk and also mortgage providers minimum terms, you may not be able to provider who will allow 6 years, also as Thrugelmir says some cap overpayments.

A decent broker will be able to guide you through, we compromised at knocking 5 years off our term, as that was still 'affordable' on either of our salaries in case circumstances changed.

Then we chose a lender who had a fairly lenient overpayment allowance too.