Payoff 50% of Mortgage or reduce overall Mortgage Term


I'm considering paying off part of my mortgage currently which is around 150k Lifetime tracker 0.75% + BoE Baserate so now 4.75% 14 Years left.

As I understand it the best choice when overpaying is to always reduce the remaining Term (Years/Months) remaining.

Which is the best Choice in the following example.

Option 1 -   Payoff 50% reducing monthly repayments by around half and keeping the term at 14 years

Option 2  - Payoff 50% reducing the remaining term by around half 7 years (estimate) keeping the month repayments at same rate

While both would obvious save a large amount of interest over the durations which option would save the most in interest over the course of the mortgage, I can't seem to get the correct calculation to work out which will save the most in interest payments.



  • picky123picky123 Forumite
    65 Posts
    Tenth Anniversary 10 Posts Combo Breaker
    Assuming you can make unlimited overpayments, the obvious choice must be option 1 but over pay each month at the rate you are paying now.

    That way, if a disaster occurs and income drops you have a lower contractual payment and some flexibility.

    If you can not make overpayments, then it has to be option 2 for max interest saving
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