Reduce term or overpay?
in Mortgages & endowments
10 replies 620 views
It probably doesn’t make a blind bit of difference but just wanted to check. I’m about to go onto a new 5 year deal with my current provider. Over the past few years I’ve been overpaying and the term has come down accordingly. Now as I’m about to switch to a new product, I have the option to reduce the term (and pay more) when I sign up. Or I could stick with the term and just continue over paying. Does it make any difference, other than having the flexibility not to overpay if I don’t want to some months?
Hope all that makes sense!
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If you keep the same term you can chose to overpay each month
Actual mortgage stating amount £75,150
Overpayment start date 1/3/23.
Starting balance £66,565.45
Current balance -£65,553.80
We couldn't at the time we took out the product trust ourselves to religiously make the overpayment every month.
Now we overpay as well as making the contracted monthly repayments.
10+ year: increase term, dont' overpay, invest 100% in S&P500
5+ year: increase term, overpay 50%, invest 50% in S&P500
<5 year: reduce term + overpay
Only as I was going 5yr fix so taking a couple of years off term helps towards later mortgage years.
Next move hopefully means I could re add small manual overpayments to help shorten term further.