UKPersonalFinance: Getting your pounds in order

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Mortgage fix coming to an end. Do I make a lump sum payment to either reduce monthly payments or reduce mortgage term? (lemmit.online)

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The original was posted on /r/ukpersonalfinance by /u/boatandhos on 2023-08-11 12:16:12.

Hi,

Am looking at making a lump sum payment at the end of my 3 year fix in October. £72,000 balance. Considering between £10,000 and £20,000 lump sum payment.

Does it really matter if I chose to either reduce the monthly payments and keep the term the same, or reduce the term?

Rough calculations show that new monthly payments with a £20,000 lump sum payment would make my monthly payment £350 p.m

Or, alternatively monthly payments would be £490 p.m. But with a £20k reduction in balance, I would knock off 11 years and 9 months from the overall term.

Probably too simplistic of a question ,but I wondered which is the better option?

Thanks!

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