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• FIRST POST
• w00519772
• 10th Oct 18, 5:08 PM
• 1,255Posts
• 214Thanks
w00519772
I have made regular overpayments on my mortgage over the last one year. I am trying to understand the difference between:

1) Reducing the term of my mortgage
2) Not reducing the term of my mortgage

My first mortgage payment ever was 541. Say my mortgage payments over the first 12 months were as follows:

1) 521
2) 518
3) 513
4) 508
5) 501
6) 497
7) 492
8) 489
9) 486
10) 482
11) 477
12) 472

The mortgage payments have decreased each month because I have made overpayments and not reduced the term. I am trying to calculate how much I have lost (due to interest payments) by not reducing the term. Here are my calculations:

(541-521)+(541-518)+(541-513)+(541-508)+(541-501)+(541-497)+(541-492)+(541-489)+(541-486)+(541-482)+(541-477)+(541-472)=536
(3.25/100)*536=£17.42

Have I lost approximately £17.42 in interest payments by not reducing the term and keeping to my original monthly payment? I was expecting it to be more as I have found lots of posts on here where it is strongly advised to reduce the term.
Page 1
• zx81
• By zx81 10th Oct 18, 5:11 PM
• 22,072 Posts
• 24,062 Thanks
zx81
No. Less than half that, as interest is calculated daily, and the large underpayments are in the later, more recent months.
• Typhoon2000
• 10th Oct 18, 8:10 PM
• 977 Posts
• 491 Thanks
Typhoon2000
Ideally you would want to keep the payments the same every month. So if the mortgage payment goes down by x the next month, over pay by £541+x.
Your still paying less interest my overpaying as you are though.
• Thrugelmir
• 10th Oct 18, 8:15 PM
• 63,137 Posts
• 56,034 Thanks
Thrugelmir

The mortgage payments have decreased each month because I have made overpayments and not reduced the term.
Originally posted by w00519772
Has your monthly direct debit been recalculated every month?
"'The true investor . . . will do better if he forgets about the stock market and pays attention to their dividend returns and to the operating results of their companies.'" - John Bogle
• bigstevex
• 10th Oct 18, 8:32 PM
• 844 Posts
• 383 Thanks
bigstevex
Weird, mine only gets recalculated when the rate changes, I overpay every month a set amount and pay the same set amount for X months

Halifax
• w00519772
• 11th Oct 18, 7:04 PM
• 1,255 Posts
• 214 Thanks
w00519772
Has your monthly direct debit been recalculated every month?
Originally posted by Thrugelmir
My monthly direct debit has reduced each month due to the overpayments.
• getmore4less
• 11th Oct 18, 9:44 PM
• 35,851 Posts
• 21,946 Thanks
getmore4less
It makes a tiny difference, all that matters are the total payments.

Some lenders reduce the payment as if they don't it includes an overpayment that counts towards max overpayments before ERC kicks in.
• kahinaj
• By kahinaj 12th Oct 18, 8:19 AM
• 4 Posts
• 1 Thanks
kahinaj
I can't geat my ahead around whether to reduce my mortgage term or reduce my monthly payments. As I understand it reducing the term will save me £ on not paying interest on however many years I reducee the term by. However would I be right to presume my monthly payment will go up?
• takman
• By takman 13th Oct 18, 3:56 PM
• 3,785 Posts
• 3,467 Thanks
takman
I can't geat my ahead around whether to reduce my mortgage term or reduce my monthly payments. As I understand it reducing the term will save me £ on not paying interest on however many years I reducee the term by. However would I be right to presume my monthly payment will go up?
Originally posted by kahinaj
If you overpay and reduce the term it will mean your monthly payments stay the same.
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