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So that's assuming you can make 5% all the time and that interest rates don't rise (which is an unlikely scenario with 18 years).
Does it take into account the 6.5 years of being mortgage free? That's 6.5 years you can invest your previous mortgage payments and the overpayments.
hippy-
Well that's where it gets complicated.
For instance a rate of around 2.25% going up to 6% after 7 years roughly matches up with savings at 4.5% per annum.
That 6.5 years of being mortgage free is matched by the decrease in your cash (i.e. you've paid off at the end of 11.5 years but with no savings or you've got ~ £95k in the bank at that point and a mortgage of ~£85k).
It's obviously not set in stone but it is worth considering whilst you have low interest rates and can get decent returns. There are further considerations in terms of overpayment restrictions, early repayment fees, etc.
At the moment the ability to access the cash is the key consideration for me. Although you can get cash out if you overpay that is limited to that mortgage deal, you won't be able to get that cash after you've remortgaged (unless you do it at the start of the mortgage with a higher principal).
aggi
Worked it out at 18 years (my mortgage period) and 2.25%.
Overpaying £500 a month would save interest of ~ £15k (and mean that the mortgage was paid off in 11.5 years).
Investing £500 a month at 5% compounding for 11.5 years would generate interest of ~£24.5k.
I've just discovered that this spreadsheet has a nice option for comparing savings to overpayments http://www.locostfireblade.co.uk/Downloads/MortgageSpreadsheet/Mortgage%20Schedule%20Calculator.xls