Overpay or Less Years?

anotheruser

We're re-mortgaging.
I'm not talking about huge amounts though - perhaps only an extra £50-£100 a month overpayment.

Is it better to have less years on the mortgage (thus pay more per month) or have the full years left from the original term (in my case, 19) and overpay?

Sorry, still really confused with this stuff.

I have already accepted the mortgage is unlikely to be paid off within 5 or 10 years or whatever and when originally taking out the 25 year term, accepted I would be paying it for 25 years (although as the LTV rose, hopefully paid less per month through re-mortgaging every few years).

kingstreet

The end result is exactly the same. A contractual payment which is £50 a month more or a £50 voluntary overpayment will save the same interest/months on the term.

The question is do you want a higher contractual payment you can't avoid, or do you want a lower contractual payment with the option to make overpayments when you want?

K_S

anotheruser said:

We're re-mortgaging.
I'm not talking about huge amounts though - perhaps only an extra £50-£100 a month overpayment.

Is it better to have less years on the mortgage (thus pay more per month) or have the full years left from the original term (in my case, 19) and overpay?

Sorry, still really confused with this stuff.

I have already accepted the mortgage is unlikely to be paid off within 5 or 10 years or whatever and when originally taking out the 25 year term, accepted I would be paying it for 25 years (although as the LTV rose, hopefully paid less per month through re-mortgaging every few years).

@anotheruser Don't be apologetic for being confused, it's a very common question!

Martin Lewis answers it very nicely in this article https://blog.moneysavingexpert.com/2014/10/dont-shorten-your-mortgage-term-if-you-can-overpay/

Beetroot_24

We are with Nationwide, who have been really flexible with the term and contractual payment. We've both doubled and halved our term mid-fix with no hassle or fee, so we haven't been 'stuck' paying a contractual payment. Psychologically, I prefer fewer years but that's just my preference. It may be worth asking your lender how flexible or rigid they are.

RelievedSheff

We went with fewer years.

simon_or

Overpay over a shorter term any day. Why would you lock yourself into a higher payment if you can achieve the exact same savings by overpaying while keeping the flexibility to stop overpaying in your own hands as opposed to depending on lender policy, affordability assessments, personal circumstances, etc. if you do need to bring down your monthly payments for any reason.

Sncjw

I would stick the amount you are contracted to then any money left over pay it to mortgage so that you have flexibility if you have a month where you struggle with money. Also you never know in the future you might not be able to afford it if it's contracted