Overpayment - reduce term or reduce monthly payment

Phirrup

Hi everyone,
This is my first post ever on a forum, scary........
I am debt free ( other than the mortgage) and over the past few years I have begun reducing my mortgage with overpayments. I have got to the stage were the monthly repayment is easy to cover within our monthly budget.
My question is: from here do I reduce my monthly repayment amount or the length of mortgage term?

Thanks in advance for any replys I get, God I hope I get one :rotfl:

Mortgage details.
Balance: £68752.35
Term 11years 7 months
Monthly £563.66
Interest rate 2.29% fixed until 2023.
I can overpay 10% each year.

kuratowski

Welcome to the forum!

If you reduce the mortgage term, you will end up paying less interest overall. As the monthly repayment is easy to cover, that sounds more useful to you than reducing your monthly payment amount.

Moneyminded

Welcome to the forum, nothing to be scared of.

Definitely reduce the term, you will pay less interest overall. If the 10% over payment is easy to achieve each year start putting this aside in a separate account so that you can pay a lump sum when you current fixed term deal comes to an end.

Phirrup

Reducing the term does sound the logical step but then again when the fixed term is up I will look for a better deal and renegotiate the new term from that point.
As I can only pay 10% off each year would I pay more off by reducing the term? Logic would suggest I would but I am not 100% confident

strawb_shortcake

We pay 10% a year too the jump in difference of interest paid monthly is significant, it would be somewhat reduced if we opted to lower the monthly costs.
It always seems a bit of an odd choice to me to overpay then reduce the monthly repayment.

getmore4less

All that matters is total payment, term just sets a min payment.

If hitting the overpayment limit consider reduced term or just save in high interest options.