I've been frying my brain over a mortgage comparison for a house I'm buying.
It comes down to what I hope is a simple maths problem to someone who is actually good at maths, unlike me.
1) Mortgage A has a fixed interest rate of 1.89%. This mortgage allows overpayments of £500 or over to trigger a recalculation of the interest and shorten the term (as opposed to reducing the monthly payments).
2) Mortgage B has a fixed interest rate of 1.99%. This mortgage requires overpayments of £4500 or over to trigger a recalculation of the interest and shorten the term (as opposed to reducing the monthly payments).
At the end of a 5 year period (for comparison's sake), if we didn't overpay, mortgage A would be roughly £1200 cheaper.
During those 5 years, what would be the impact of overpaying by a total of £10000 in small £500 regular chunks VS bigger, less regular, £4500 chunks?
If possible, can you show the working, rather than just the result, so I can see how you've done it and learn for future reference?
Thanks in advance for your help.