Overpay or put mortgage up?

bunsey · 12 June 2017 at 11:17PM

Sorry if this is a silly question, not very clued up on mortgages! We have a new tracker which we can overpay as much as we like in to. We made a one off large overpayment last month and received a letter to say our mortgage had reduced by approx £100 a month from now on due to us having made an overpayment over a certain sum. Does it make any difference if we ask the mortgage company to put our mortgage back up to the original cost per month or make an overpayment each month for the £100 difference? I understand if we keep paying the original amount the term wold be reduced but will leaving it at the new lower amount but overpaying the difference monthly do the same job? Thanks

glosoli · 12 June 2017 at 11:48PM

It will do the same job as any overpayment you make will go towards the capital balance of the mortgage, therefore whether you do this by an increased dd payment or by manual overpayments then its swings and roundabouts.

Wookey · 13 June 2017 at 11:18AM

You could also put that £100 pm (plus any other spare cash) into one of the 5% regular savers that are floating about and then when it's term runs out put the full amount accrued into another one off mortgage payment.

Either way i would not want to be making largish payments and still have the original term of the mortgage hanging over me, so save up and make the larger overpayments with the view to wiping the mortgage out asap or maintain payments at the current rate + the £100.

Overpay or put mortgage up?

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