Mortgage mathematics.

[goode262]

Hello PH'ers,

Question: Which will save me more money?

Overpaying £200 per month on my mortgage currently on a 20 year term, or (if the rates were exactly the same) shortening the term so that I am still paying the same amount per month (basic mortgage plus the £200) but over a shorter term/shortening the term of the loan?

Which choice means the bigger saving, or is there no difference? I can't work it out, so who better to turn to than PH; which has giuded me through many a difficult decision in the past.

Many thanks,
G

[scotal]

They'll work out the same.

Overpaying will give you more flexibility. i.e if you keep the term at 20 years and set up a £200 overpayment, then for some reason need to cancel that op in the future you can. If you adjust the term you don't have that flexibility.

(Well actually you do, but you'd have to go and ask your lender to change the term, whereas with the o/p method you have complete control. )

1. Check you have an o/p facility without erc's kicking in.
2. Check you are on daily of monthly rest, if you are on annual rest it makes no ssense to make monthly o/ps.
3. Is your rate still the best available? Life time tracker or market leading SVR etc.

[goode262]

There should be a button to thank people.

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