Lower term or overpayments

joey7777

Hiya everyone. 

I have been offered a 2 year fixed mortgage with a 4.77% rate through a mortgage broker, this is reducing my mortgage term from 16 years and 4 months down to 13 years. I have also been offered a 2 year fix with a 4.6% rate from my current mortgage supplier Halifax but keeping the term at 16 years and 4 months but I can make overpayments. Would overpayments cut away at the term. What do people recommend please. 

Hoenir

The Halifax could shorten the mortgage term if requested them to do so. 

The quicker the capital is repaid. The lower the amount of interest you'll be charged. The sooner the mortgage will be gone. 

BarelySentientAI

Overpayments 'accidentally' make the term shorter (if you keep the same monthly payment), but you have the opportunity to stop making them if you can't afford it.

Shortening the term locks in the higher payment and you can't easily make it lower again.

chanz4

same end goal really

Edi81

Take the lower interest rate and manually overpay to the repayments on the shorter term. 

Newbie_John

Three ways to reduce mortgage length:
a) remortgage
b) overpayments
c) saving elsewhere and paying off mortgage in full few years earlier (when you ready)

Remortgage can by risky, because you HAVE TO pay it off within the shorter time frame. The other two option offer flexibility if something happens like losing job etc.

So I'd choose the 4.6%.

joey7777

Thanks everyone 

BikingBud

joey7777 said:

Hiya everyone. 

I have been offered a 2 year fixed mortgage with a 4.77% rate through a mortgage broker, this is reducing my mortgage term from 16 years and 4 months down to 13 years. I have also been offered a 2 year fix with a 4.6% rate from my current mortgage supplier Halifax but keeping the term at 16 years and 4 months but I can make overpayments. Would overpayments cut away at the term. What do people recommend please. 

Ensure you are aware of and content with the Halifax overpayment methodology.

They tend to recalculate and reduce the payments rather than provide the reduced term that other lenders might offer more really. So you need to be certain it works with your planned repayment/overpayment strategy.