Barclays mortgage, overpayment balance, what action to take?

Wabiloo

Hi all,

I have had a mortage with Barclays for a number of years, and a few years back was in the fortunate position to be able to make overpayments.
Based on experience with a previous lender (and bad advice from mortgage advisor), I thought that those overpayments were going to be taken into account to reduce the capital and thereby reduce the monthly repayments. Turns out they instead went to an "overpayment balance" that reduces the term (11.5 years).
After the 5-year fix, we just renegotiated a new 2-year fix, and as a result the monthly payments are much higher than I anticipated.

I called Barclays and told me I have the option to ask them to "recapitalise", which will effectively reduce the monthly fee, but extend the term back to the contractual value (15 years). All that without incurring any ERC.

What I'm trying to work out is: what's the best option between the 2 to ensure that at the end of the term (whichever one it is), I have paid the least amount of money to the bank. 

Here are the (rough) figures:
- Balance of the mortgage: £260k
- Overpayment balance: £55k
- Contractual term: 15 years
- Current (fixed) rate: 4.69%
- Current monthly payment: £2500
- What the monthly payment would be if I asked them to "recapitalise": £2100

I am not sure how to work it out. And even less sure what to do given that in 2 years time it will be time to re-negotiate and maybe take the mortgage elsewhere anyway...

Any help or advice would be gratefully received!

Newbie_John

Your goal is to pay the least to bank as possible.

Then don't change anything - right now your paying interests on £205k. If you change the type of overpayment, you'll still be paying interest on £205k but for additional 3.5 years - meaning more money paid to the bank.

And to pay even less, continue overpayments - the more you overpay the less interests you'll have to pay back in the future (no matter if it reduces term or monthly payments - every £10k you put in means £469 less interests to be paid overall).