Reduce mortgage term or continue to pay monthly repayments

D

Daniel

Guest
Looking for some guidance on the below.
Currently I am over paying my 340k 25 yr mortgage by €400. I was wondering whether I should continue paying this or whether it would be more beneficial to reduce term by another 5 yrs to 20 yrs which would roughly equate to the same amount I am paying now on a monthly basis.

To me the main disadvantage of reducing term is that I am stuck on higher repayment if circumstances change etc or if interest rate on mortgage, currently 2.25%, increases which should be unlikely over the 12 months. However I am comfortable making these payments at present and it is not affecting my lifestyle. Therefore I am better reducing the term rather that continuing with the repayments.

Would appreciate any advice.
 
What is the advantage that you see in reducing the term? Will you get a better rate? If not, I see no strong reason to myself. This way the flexibility is under your control.
 
Agree with previous poster, you may also save a little on your mortgage protection/life cover by reducing the term.

Keep overpaying and keep the flexibility.
 
How about making a lump sum payment off the capital every six months of €400 x 6 and reducing the term. This way you have the best of both worlds, reducing your term while having flexability.

Also check your loan to value percentage, the bank won't tell you when you qualify for a lower rate due to a lower LTV percentage.
 
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