Overpaying a mortgage

WLad

Hi, we're moving our mortgage to AIB and they say we can "overpay" by 5000 per year. We are thankfully in a position to do this so I'd like to. However the rate we are moving to is a fixed rate for 5 years and their website says that if we overpay the term stays the same and instead our monthly repayments reduce to reflect the extra we paid.

I cannot wrap my head around whether this is a good thing or not. I'd like to pay off early if I could but this doesn't seem like it will help me get there. Is overpaying by this amount for 5 years and then remortgaging for a lower amount the same thing as just overpaying to reduce the term?

Thanks in advance for helping me understand the logic here.

G_R

https://www.boards.ie/discussion/2058327664/overpaying-a-mortgage

You should be able to tell them that you want it to come off the capital balance and reduce the term and leave the monthly payment as is. The above is likely just the default action if you don't instruct them as to what you want them to do.