Overpayment v Repayment

Sevs66

Hi
I'm approaching the last 12 years of my current mortgage and I'm wanting to reduce my mortgage quickly. I'm currently on an interest only with an investment looking towards paying up the balance on completion. However, I find myself in a situation where I have monthly disposable income available now and will have going forwards so wanted to start to pay off my mortgage earlier leaving me with some/ all of my investment available for retirement years. What I wanted to know is it better for me to overpay on my current interest only mortgage (I am allowed to do this as I've checked the small print) or switch my mortgage to a repayment for the last 12 years. If anyone has advice to this effect it would be greatly appreciated.
Thanks 

AntoMac

Personally I would stick with overpaying the interest only mortgage to give more flexibility if circumstances changed and the additional funds were difficult to find. Would the interest rate be different if you switched to overpayment? This would also be worth considering. 

MovingForwards

I would stick with overpaying it rather than changing to capital and interest. That way if your financial situation changes you have the flexibility to drop back down to paying the IO element whilst sorting out your financial circumstances.

How are your pensions looking?

Thrugelmir

What's your back up plan if your "investment" collapses in value? 

Repayment at least provides you with the discipline to meet your objective. With overpayment easy to spend money and say that you'll catch up next month. Next month eventually never comes. 

Socajam

As someone who went through what you are going through now, I would change my mortgage to repayment, keep the investment going and overpay - make sure that you have an emergency fund and a life happens fund.
The best thing I did was switched to repayment and kept my endowment going.
The mortgage was 60,000 and the endowment paid out close to 48,000.  If I had kept the interest only mortgage, I would have had to find close to 12,000 which would have wiped out a lot of my savings.
We are going into a period of uncertainty, even if they promised that your investment would pay out, as someone said what happens if the stock market drops considerably.
Do a search on here and you will see there are a lot of people who have left their interest only mortgages too late to switch - don't be one of them.

Sevs66

Thanks all for the advice. My worry is if I switch to a repayment now over the remaining period of my Mortgage it would be too expensive for me to afford but at least I will look into that as an option now as well as the overpayment (with added discipline :-)

MovingForwards

If you have a play with some mortgage calculators, but don't do a DIP, that will let you know what the monthly payment could be.

Having a mortgage running into retirement doesn't mean you can't make overpayments, have a play with mortgage overpayment calculators and see the difference paying an extra £25, £50, £100 each month makes.

https://www.halifax.co.uk/mortgages/mortgage-calculator/overpayment-calculator/

The above is the one I use and if I pay £24 extra pm, it saves 3 years mortgage payments / interest.

You haven't given any figures so we can't do calculations to show different options.

It would be worth having a chat with a broker to see what your options are.