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  • FIRST POST
    • Jbrennan
    • By Jbrennan 11th Oct 16, 5:46 PM
    • 2Posts
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    Jbrennan
    Overpay interest only or go to repayment
    • #1
    • 11th Oct 16, 5:46 PM
    Overpay interest only or go to repayment 11th Oct 16 at 5:46 PM
    Our interest-only mortgage deal is ending soon and we are currently doing some home renovations.
    We always intended to change to repayment at the end of this deal, for peace of mind, but would we be better keeping at interest only and overpaying by up to the permitted 10%. This would give us flexibility if we need some cash short-term for the renovation? Is there any difference between paying off your capital by overpaying vs. the fixed repayment terms? Thanks
Page 1
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 5:51 PM
    • 51,295 Posts
    • 43,102 Thanks
    Thrugelmir
    • #2
    • 11th Oct 16, 5:51 PM
    • #2
    • 11th Oct 16, 5:51 PM
    Do you have the discipline to make the regular overpayments?

    Are the overpayments sufficient to clear the balance?
    Last edited by Thrugelmir; 11-10-2016 at 7:03 PM.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • MortgageMamma
    • By MortgageMamma 11th Oct 16, 6:52 PM
    • 6,157 Posts
    • 3,029 Thanks
    MortgageMamma
    • #3
    • 11th Oct 16, 6:52 PM
    • #3
    • 11th Oct 16, 6:52 PM
    Will the overpayments clear your mortgage balance at the end of the term? Have you tried using the mortgage calculator on this website to work out how much you need to overpay?
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • getmore4less
    • By getmore4less 11th Oct 16, 7:22 PM
    • 26,283 Posts
    • 15,803 Thanks
    getmore4less
    • #4
    • 11th Oct 16, 7:22 PM
    • #4
    • 11th Oct 16, 7:22 PM
    Our interest-only mortgage deal is ending soon and we are currently doing some home renovations.
    We always intended to change to repayment at the end of this deal, for peace of mind, but would we be better keeping at interest only and overpaying by up to the permitted 10%. This would give us flexibility if we need some cash short-term for the renovation? Is there any difference between paying off your capital by overpaying vs. the fixed repayment terms? Thanks
    Originally posted by Jbrennan
    Answering the question asked....

    NO.

    The payment you make determines the cost and real term of your mortgage(or whats left if not enough payments)

    all a repayment mortgage does is set a payment that will pay it off in the term and it becomes the contractual minimum payment.
    • Jbrennan
    • By Jbrennan 12th Oct 16, 12:15 AM
    • 2 Posts
    • 1 Thanks
    Jbrennan
    • #5
    • 12th Oct 16, 12:15 AM
    • #5
    • 12th Oct 16, 12:15 AM
    Thanks - guess it is short term option to give us flexibility while fixing up house. And ramp up overpayments when we can after
    • Thrugelmir
    • By Thrugelmir 12th Oct 16, 9:18 AM
    • 51,295 Posts
    • 43,102 Thanks
    Thrugelmir
    • #6
    • 12th Oct 16, 9:18 AM
    • #6
    • 12th Oct 16, 9:18 AM
    Thanks - guess it is short term option to give us flexibility while fixing up house. And ramp up overpayments when we can after
    Originally posted by Jbrennan
    Keep your eye on the required level of capital repayment every month. It soon ramps up and becomes more challenging. More so if interest rates were to rise.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
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