Mortgages - ways of reducing term?

L

Lingua

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I bought off plan 3 years ago, with a 20 year mortgage of 100.000 eur.
The SSIA (2007) will be used to pay off all debts and free up approx 550 eur a month. My question is this: Since I want to reduce my mortgage term to 10 years (instead of 20), is it better to top up the mortgage repayments with the 550 eur or to save it and pay in a lump sum after some years, thus avoiding interest?

Kaygo
 
Reducing the capital sooner rather than later - even incrementally - yields the best results in terms of reducing the effective mortgage term and overall interest costs. If you have €550 p.m. extra that you don't need for some other purpose then you should top-up your normal repayments with this (assuming your lender agrees and you make it clear that this is a capital repayment) rather than saving it up to a lump sum and then paying it off in one go. Use Karl Jeacle's mortgage calculator for modelling the effects of various accelerated repayment strategies.
 
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