Over pay mortgage or reduce term years?

Cam93

For the last 12 months I’ve overpaid by 1k pcm, now we’re coming up to remortgage this will obviously reduce my term (was originally 40 years).

im wondering what’s best, do I reduce my term length to say 25years which would reduce interest payments over X amount of years, or do I keep the term as high as possibly so the monthly amount is at the lowest pcm, then over pay? 

kuratowski

Overpaying is more flexible.  Just make sure you know how much you can overpay without incurring charges.

amnblog

The agreed term is irrelevant. Your overpayments will dictate the actual term of the lending.

Thrugelmir

By leaving the term as is and overpaying. You leave yourself flexibility should your income level drop. As you'll have a lower fixed monthly outgoing. 

Sensory

Assuming you can still obtain the lowest interest rates, choose the maximum term possible whilst being able to overpay as much as you can afford without charges. Even better if subsequent underpayments are allowed as a result of prior overpayments to give yourself further breathing room should your income unexpectedly drop. A shorter agreed term exposes you to a higher risk of repossession unnecessarily.

zagubov

I would like to concur with the other posters, as in there is more flexibility in keeping the term extended while overpaying.