Paying a little extra on a mortgage

O

ONU

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I have 10K saved and a fairly average mortgage to pay. I am confortable with my mortgage repayments and I want to increase them. The question is:
Will I be better off overpaying say €300 a month and therefore reducing my term and interest or putting my 10K as a lump sum?.

I don't really need the money now and we are planning to sell in approximately 2 years.
 
If, by "better off", you mean which strategy will save you most in interest charges avoided then, as far as I know, reducing the mortgage outstanding by the €10K lump sum will yield higher savings that the €300 extra a month. Obviously both will reduce the interest costs even further and reduce the effective term of the loan too. Karl Jeacle's mortgage calculator is good for modelling the effects on total interest costs and effective mortgage term of various lump sum and/or regular accelerated repayment strategies. However this is just focusing on the mortgage to the exclusion of all other issues - e.g. do you have sufficient pension cover, will you need the €10K lump sum when you buy a new home (e.g. to fit it out etc.) and so on....
 
Thank you ClubMan. Somebody recomended me to make an effort and pay €300 extra each month and reduce interests and the interest costs provided you are OK with repayments. You will have to do an extra effort but you still keep your 10K.On top of that you will reduce by 10 years a 30 year mortgage...
 
Basically all accelerated repayment strategies will save you money and usually reduce the term of the mortgage. By how much depends on the specific strategy. Use the calculator to estimate the potential savings in each case.

Again this is dealing with the mortgage issue in isolation and on the assumption that there are not more appropriate issues (e.g. other higher cost debts, maximising your SSIA contributions, pension savings etc.) that you might be better off addressing first.
 
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