Barclays Regular Overpayments or Lumpsum?

jamesmarks78

I have a Barclays 7 year fixed Mortgage and I want to save as much money as I can in the long term and reduce the amount of interest I pay them. However I am confused as to what is the best overpayment strategy. Below is a description of the overpayment options that Barclays give me, either regular overpayments or larger lump sums. My question is, will I save more money and pay less interest in the long term by doing regular smaller overpayments or by paying a lump sum? Assuming overall the amount I pay will be the same amount but one will be paid into the overpayment balance and another will be the lump sum option below.

Barlcays Bank: Every overpayment you make means you pay less interest overall on the money you borrowed from us. Overpayments do one of two things to your mortgage balance, depending on the amount.  

Overpayments higher than 3 times your usual monthly payment

These reduce your monthly payment. That means we recalculate your monthly payment but your term stays the same.

Overpayments lower than 3 times your usual monthly payment

These overpayments help you pay off your mortgage sooner but your monthly payment stays the same. They go into an ‘overpayment balance’, which we take into account when working out your interest charges. The overpayments build up to an amount that can help you pay off your mortgage sooner. It can also enable you to make underpayments in future, which we explain in detail below.

Thanks everyone

Orchid96

With both options, you will be saving the same interest charge. I would prefer the second option (less than 3times monthly), as it will keep the monthly payment same, which effectively becomes like a regular over payment monthly (as you are paying more than the monthly rate in case of first option). With the first option, your monthly payment will be reduced, hence the mortgage term will remain the same (means more interest charges). Also second option gives you more flexibility to do an underpayment in future if required.

jamesmarks78

Orchid96 said:

With both options, you will be saving the same interest charge. I would prefer the second option (less than 3times monthly), as it will keep the monthly payment same, which effectively becomes like a regular over payment monthly (as you are paying more than the monthly rate in case of first option). With the first option, your monthly payment will be reduced, hence the mortgage term will remain the same (means more interest charges). Also second option gives you more flexibility to do an underpayment in future if required.

Thank you so much this is really helpful