First Remortgage - Better to extend to 35 years and overpay?

UndergroundSaxClub

Hi all.

It's almost time for my first ever remortgage and I'm hoping for some advice on the "best" deal when factoring overpayments. I'll add in my details below, apologies if they format a bit odd I'm not sure how to make these neat. I'm also unsure of the overall cost difference between these options as almost all the capital is paid via overpayments and would really appreciate advice/a steer in figuring this out.

Current:

Flat Value: £80,879

Original Loan £62,000

Mortgage Balance; £46,701

Monthly Payment: £379

Current Rate: 6.19%

Remaining Term: 16 years

I am about to expire from my initial 2-year fixed term above, and during this time I have overpaid £6200 each year, which is 10% of my original loan, along with an additional, one-off payment £1500 earlier this year. I am able to go above 10% annually, however incur a small fee. When overpaying I opt for a reduction in term, rather than reduced payments.

I am ready to fix into a new 5-year deal, however I am not sure the "best" option given I can aggressively overpay each year. Do I continue with 16 years, overpay as I have done with "less" money coming to me directly/going into savings, or should I go for a longer term, with a substantial amount of interest which I can hopefully "skip" due to overpayments.

I'm welcome to options/advice or a term somewhere in the middle, the 2 scenarios I am looking at are both 4.09%:

Option 1:

Continue with 16 year term, £334 monthly and overpay

Option 2:

35 year term, £210 monthly and overpay

My thinking is option 2 will provide a bigger savings pot to clear the mortgage entirely once my 5 year term ends. However, Option 1 will make a bigger dent in the principal itself and require less of a savings for the final payment.

I am leaning more towards Option 2, just to have the money on me directly for (hopefully) a decent savings rate, (whereas with the mortgage I am locked at 4.09% for 5 years), an appliance failing or emergency etc. The main concern is I am paying into the void, at least initially during the first few years.

Appreciate this is a very long post. Thankful for any advice or guidance, if there are any resources I can type these values in for a cost difference it would be greatly appreciated.

ACG

6.19%? Sounds like an Aldermore or Pepper type of mortgage? 
Any mortgage you go to now will likely be cheaper (assuming adverse or whatever the issue is/was has cleared up). 

As a minimum I would keep the term the same personally and overpay what you can assuming the mortgage rate is higher than any savings account you can get. 

I extended my term right out, but I am self employed. I have good months and bad months. 

UndergroundSaxClub

Thanks for the reply.

The 2-year fixed @ 6.19% is with Nationwide, and the options/interest rates for remortgaging were confirmed today in their app (4.09%).

I'm not aware of any issues when I first signed up/bought my flat 2 years ago?

ACG

Oh sorry, I assumed it was adverse but yes 2023! That was an awful year I think I have tried to put it out of my memory! The year when rates rocketed! 

Yorkie1

It may be that you would need to go through a full affordability check if you wish to change the length, whereas a product transfer on exactly the same terms doesn't have any additional checks.