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  • FIRST POST
    • Spendingqueen
    • By Spendingqueen 6th Sep 17, 7:39 AM
    • 71Posts
    • 10Thanks
    Spendingqueen
    Overpay when interest high?
    • #1
    • 6th Sep 17, 7:39 AM
    Overpay when interest high? 6th Sep 17 at 7:39 AM
    So a mortgage 95% £136,000 borrowed. Interest rate 4.49%.

    With the option to overpay £500 per month is this a good idea / investment? Or would It be better to save this money?

    Fixed term is 2 years. I would hope by 2 years to have moved down to the 80% LTV ideally to get a better interest rate.
Page 1
    • Tom99
    • By Tom99 6th Sep 17, 8:58 AM
    • 557 Posts
    • 329 Thanks
    Tom99
    • #2
    • 6th Sep 17, 8:58 AM
    • #2
    • 6th Sep 17, 8:58 AM
    Providing you have enough emergency capital I would overpay, particularly at that rate.
    • Tropically
    • By Tropically 6th Sep 17, 12:40 PM
    • 144 Posts
    • 417 Thanks
    Tropically
    • #3
    • 6th Sep 17, 12:40 PM
    • #3
    • 6th Sep 17, 12:40 PM
    I don't know of any safe way to get 4.49 % on savings. If you can get higher than 4.49%, then save. If you can't, overpay and save the interest. You have a pretty high rate, but typical for a high LTV. Overpaying is a guaranteed savings of 4.49%. I would.
    Mortgage started at £318,000 in June 2016. Original MF - 2041
    2017 OPs: £7000/£7000
    Mortgage in Nov 2017 - £297,808
    • MichaelDH
    • By MichaelDH 6th Sep 17, 1:05 PM
    • 100 Posts
    • 470 Thanks
    MichaelDH
    • #4
    • 6th Sep 17, 1:05 PM
    • #4
    • 6th Sep 17, 1:05 PM
    I would concentrate on over paying as much as possible now so that the LTV is reduced when you remortgage.

    I'm a newbie, have only just started making over payments myself despite having the mortgage for a year, seeing the balance reduce is really motivating. Set your self a target and aim for it, and remember that any payment you make, however small, is reducing the capital and saving you interest for the rest of the mortgage term.

    Good luck!
    Starting Balance August 2016: £170,199.00 | Current Balance (4th October 2017): £164,720.53
    OP's to date (starting August 2017): £906.58

    Target: Balance below £160,000.00 by June 2017
    • McTaggus
    • By McTaggus 6th Sep 17, 1:42 PM
    • 233 Posts
    • 310 Thanks
    McTaggus
    • #5
    • 6th Sep 17, 1:42 PM
    • #5
    • 6th Sep 17, 1:42 PM
    We are on a similar rate, but for a much larger mortgage. From my perspective, I can't get that kind of return on my savings right now, so overpayments make sense for me. We were on 95% LTV too, but our fixed rate is coming to a close soon and are now projecting to be at 83% LTV, which drops our interest rate down from 4.29% to 1.7% - a huge saving every month.

    I would say go for it!
    • Spendingqueen
    • By Spendingqueen 7th Sep 17, 7:21 AM
    • 71 Posts
    • 10 Thanks
    Spendingqueen
    • #6
    • 7th Sep 17, 7:21 AM
    • #6
    • 7th Sep 17, 7:21 AM
    Thanks guys, Just wanted to check that was the right thing to do.

    Well I have a 10% overpayment maximum so I think we can overpay £13,600 in the first year - Although I am not sure if this amount goes down monthly or yearly as if we paid more the first month the £136,000 would start to go down?

    Also I was hoping to overpay by £7000 per year so hoping getting to an 80% LTV is achievable by 2 years. How do I work it all out?
    • Spendingqueen
    • By Spendingqueen 7th Sep 17, 7:22 AM
    • 71 Posts
    • 10 Thanks
    Spendingqueen
    • #7
    • 7th Sep 17, 7:22 AM
    • #7
    • 7th Sep 17, 7:22 AM
    We are on a similar rate, but for a much larger mortgage. From my perspective, I can't get that kind of return on my savings right now, so overpayments make sense for me. We were on 95% LTV too, but our fixed rate is coming to a close soon and are now projecting to be at 83% LTV, which drops our interest rate down from 4.29% to 1.7% - a huge saving every month.

    I would say go for it!
    Originally posted by McTaggus
    Would it have been a better rate if you had got to 80% LTV?
    • Madcatgirl
    • By Madcatgirl 7th Sep 17, 2:24 PM
    • 327 Posts
    • 3,956 Thanks
    Madcatgirl
    • #8
    • 7th Sep 17, 2:24 PM
    • #8
    • 7th Sep 17, 2:24 PM
    Hiya - ours is nearly 4% and we had 85%ltv went we took it out. We had a five year fix and are in the final year of it. Due to ops and not least, house price rises, we're well over 50%ltv now. Will be very curious to see how that impacts our rate of payment next year. So, I agree, pay down as hard as you can to up your ltv now. Btw, we can op 10% each year, and it is 10% of our opening balance, not the remainder on our mortgage.
    March 2016 - £178,914.59; July 2017 £146,160.38
    Mortgage end Sept 2043; Target - pay off by March 2022, now Sept 2021
    Target balance July 2018 £112,560
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