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Thread: Switching Mortgage - Reduce term or overpay

  1. #1

    Switching Mortgage - Reduce term or overpay

    Hi,

    I'm hoping one of the gurus here will be able to help me.

    I took out a mortgage nearly five years ago. I overpay by 65 a month.

    My 5 year fixed term is coming to an end on my mortgage, so its now time to switch again. I'm finding that I can reduce the term to 16 years (from 21) and be paying the same amount as I am at the minute.

    My question is, do I reduce the term, or keep it as it is, and overpay the rest (about 120 a month + my usual overpay amount of 65)

    If anyone can give me any pointers, it would be great

  2. #2
    I'm no expert but I would look at the deals that are available for both situations and assuming that you aren't too stretched making the over payments take the one that gives you the best deal.

    If the overpayments are stretching what you can afford or your circumstances might change in the term of the mortgage remember that the longer term gives you more flexibility (as you can stop making the overpayments if you need money for something else) obviously make sure that that any early repayment fees kick in at a point which is higher than what you expect to pay over a year's worth of regular overpayments.

  3. #3
    How would you cope with a rise in interest rates.

  4. #4
    i'd personally stick with the longer term and carry on the over payments. this way you'll know exactly what you'll be paying and also have the added flexibility that if something did go awry, you could drop your overpayments to use for something else.

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