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• FIRST POST
• w00519772
• 10th Oct 18, 6:08 PM
• 1,201Posts
• 213Thanks
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, 6:11 PM
• 19,057 Posts
• 20,298 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, 9:10 PM
• 886 Posts
• 435 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, 9:15 PM
• 60,140 Posts
• 53,468 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?
Financial disasters happen when the last person who can remember what went wrong last time has left the building.
• bigstevex
• 10th Oct 18, 9:32 PM
• 806 Posts
• 375 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, 8:04 PM
• 1,201 Posts
• 213 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, 10:44 PM
• 33,282 Posts
• 20,098 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, 9:19 AM
• 3 Posts
• 0 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, 4:56 PM
• 3,703 Posts
• 3,353 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.