Two and a half years ago my wife and I changed our mortgage from  Halifax to Metrobank. We took out a 10 year loan, fixed for 5 years at 1.99% If we repay the balance during the fixed rate period we will be liable to a penalty. It is our aim to be in a position to pay off the balance at the end of the fixed rate period and be mortgage free in 2.5 years time. In addition to repaying the mortgage we are saving regularly and are on track to achieve our goal. We can overpay our mortgage by up to 20% of the original loan without penalty. We tried a small overpayment of 5k a couple of years ago and all Metrobank did was to re-calculate the balance and lower our monthly payments, thereby keeping the deal to the original 10 years. We now have over 20k in savings and I am considering paying 13k, (our maximum 20% allowance), off the mortgage and then save the difference between the new payment amount which the bank will apply and add the monthly difference to our savings. By next August we will then be in a position to overpay by another 13k. Could somebody please advise us if this strategy will help us to achieve our aim to be mortgage free at the end of the 5 year fixed rate offer?


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