I have a 5 year fixed term mortgage with UB which allows 10% overpayment. Would it be better to reduce the term of the mortgage or reduce repayments with lump sum overpayments?
Keep the term the same and manually increase payments to their current level. This will give you some flexibility if you encounter any financial difficulty down the road as you are only committed to the reduced payments.. The net effect on interest paid will be minimal.
This question comes up in a variety of ways and the threads often go off topic with irrelevant calculations. The interest charged each year is exactly the same - we will return to this. Reducing the repayment is simply reducing the payment you are contractually obliged to make under your...