Mortgage Lump sum clarification

R

Romero

Registered User
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24
Hi Folks,

Well I've searched the site for posts on this subject and found some that are helpful, I have 22,000 that I want to pay off against my Mortgage, now I know I have two options, 1 is to reduce the term the other is to keep the same term but reduce down the monthly repayments. Now to clarify in option 1 if I keep the same monthly repayments the term of my loan will reduce by x amount of years, by going with the second option the 25 year term stays the same, my monthly repayments will decrease but because I am staying at the 25 years I will pay more interest.

So if someone can confirm that I'm correct I would appreciate it.

Thanks

Romero
 
Seems correct to me. Just one clarification - option 2 results in a higher interest bill than option 1 but both reduce the interest bill compared to not making any lump sum repayment! Use Karl Jeacle's mortgage calculator to model the effects of different mortgage repayment strategies.
 
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