Mortgage term and overpayment
I have been comparing mortgages on a banks website.
It appears that the term I choose does not affect the interest rate I am offered.
In this case the deals allow 10% overpayment per year without penalty.
In this case does it makes sense to go for a longer term so my compulsory repayments are less, then voluntarily overpay in the first 3-5 years (after which point I will most likely remortgage)? This then gives me the option to be paying less should I get into financial difficulty.
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Yes if the interest rate is the same and overpayments are applied to principal then you can get a 30-year mortgage and pay it off as if it were a 15-year mortgage.
The risk is that you decide that rather than overpaying you'd rather buy a car, or go on vacation, etc. and you end up paying it over 30 years anyways. A shorter term forces you to pay it off sooner rather than relying on personal discipline.
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