Best option to be Mortgage free quicker

labradorlove

I have £90,600 left on my mortgage. There are 18 years 6 months left on the term. I am currently in a 5 year fixed rate at 2.39% with Santander that ends on 2nd a June 2024. My monthly repayment is £510 and I overpay £200 every month.

When I come to the end of my fixed rate, I am probably going to remortgage to get the best deal. We are estimating the monthly repayment will go up to around £650, plus our overpayments of £200 means we’ll be paying £850 a month.

My question is this:

Would it be better to go for the longest term possible this time, maybe around 35-40 years, bringing the monthly payment down to the lowest possible and then overpay the difference?

For example, the remaining £90,000 over 40 years at £430 a month, fixed for 5 years and then overpay £420 a month.

or

stick with the remaining 18 years, fix in at £650 a month and continue overpaying the £200?


Obviously with the first option, I’d have to make sure I take a mortgage that allows up to 10% of the total mortgage to be overpayed penalty free. 

Any advice would be great. I know I have a bit of time before it’s time to tie into a new deal so I’m hoping I can get some advice. 

NorthernExpat

Hello labradorlove, you're a lot more MSE experienced than me but thought I'd post to get you back up the latest boards  

I think it might depend on your personality and level of self control, but I think it can be good to do option B, assuming you won't be near the early repayment charge limit with your other OPs.

We did option B when we bought our current place, and are adamant that we would absolutely never drop to the minimum repayment unless something huge happens.  If you repay like you plan to, then I should think it has no impact financially.  But has the benefit of flexibility if the proverbial really does hit the fan.  One advantage is that we need less in our emergency fund as it covers 3 months of bills plus the minimum mortgage payment with no overpayments

Hope you get some others along soon who know a bunch more than me!

NE