Hi, you don't say which lender, and so the recommendation would be to get lender specific answers either through your broker or direct from the lender.

The overpayment will reduce the interest you pay immediately, so you won't lose money. It's most likly the monthly payments will come down, but the term will be shortened if you keep the payment the same (you may need to pay by standing order to achieve this and it may be classed as further overpayment so go careful)

You might want to set the mortgage up on the shorter term in the 1st place so that this is not an issue. 

Hope that helps

Adrian 

Hi,

Myself and my partner are about to sign up for the following mortgage as first time buyers:

150k loan, 5.49% fixed rate over 5 years

The deal allows us to overpay by up to 10% per year with interest calculated daily.  It looks like we stand to get a lump sum (approx 15k) only a few months after we get our mortgage and we'd like to use this to reduce our term - is this possible or do we have to wait for 5 years and renegotiate the term then?

If this doesn't reduce the term, would our monthly payments stay the same i.e. would we then be overpaying by >10% over the whole year?

Hope somebody can help!