Increasing my Mortgage re-payments

Hi all,

I've finally decided to increase my mortgage re-payments, rather than investing in a savings account or funds etc (I already have an SSIA & plan to put this off my mortgage next year)

However, my question is do I just increase the payment to whatever I can afford & leave my terms as is, or do I tell the bank that I want them to reduce my lending term, say from 25 yrs to 20 yrs? I'm not really sure what makes better sense ?

Thanks, Jane

If you want to reduce your overall long term interest bill and effective term of the mortgage then tell your lender (in writing preferably) that you want overpayments to be offset against capital and not held in reserve on your mortgage account. This will reduce the effective term of the mortgage and you will pay less interest in the long run.

Hi Clubman,

Thanks for your comments. Can I ask you to explain how that works ?

Thanks, J

How what works? If you mean reducing the interest bill and the effective term through accelerated regular or lump sum (capital) repayments then see Karl Jeacle's mortgage calculator.

Thanks.