I am thinking of using some savings to reduce my Mortgage, and would appreciate thoughts on which is the best thing to do, reduce the principle or reduce the term of the mortgage? my lender has said most people reduce the term, but would like some other opinions.
i would always go for the reduce the repayments option and continue with the same repayments (either option will reduce the principal), this will effectively reduce your term anyway but gives you more flexibility should for any reason you are not able to continue with the same repayments you can drop back to what the reduced payments would have been without having the hassle of going back looking for the term to be extended again.