Should I reduce principal instead of term on fixed as I notice no change in interest when reducing term?

E

Eoghan

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If I make an overpayment on a fixed mortgage to reduce the term should the interest be lower on the following payment or does it stay the same. I made a 4000 overpayment and the interest didn't budge. When I overpay to reduce the principal however I notice the principal and interest reduce. Would I be better off reducing the principal when overpaying on a fixed and then requesting to reduce the term in writing if that makes sense?
 
Making an overpayment does not reduce the interest rate charged.

It will reduce the balance on your mortgage, so it will reduce the amount of interest charged.

Key Post - "Overpaying my mortgage - should I reduce the term or the monthly repayment?"

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...
www.askaboutmoney.com

If you your overpayments are enough to bring you into a lower LTV band, then you could apply for the lower rate applicable to that band.

Brendan
 
Last edited:
I'm below 60 LTV. I'm at around 29% LTV at this stage. Brendan, do you think that would be a good idea to reduce principal instead and call the bank to reduce the term by a year?
 
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