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  • FIRST POST
    • DropD
    • By DropD 4th Dec 17, 9:28 PM
    • 7Posts
    • 3Thanks
    DropD
    Part & Part - Overpayments
    • #1
    • 4th Dec 17, 9:28 PM
    Part & Part - Overpayments 4th Dec 17 at 9:28 PM
    We have a £90k loan with two thirds on interest only and remainder on repayment. Our loan rate is 2% fixed for 5 years. Loan Term is 12 years.


    We are in position to overpay by around £300 - £400 per month and wondering if should apply this to the repayment or interest only part?


    Anyone any thoughts on best approach?


    Thanks
Page 1
    • Thrugelmir
    • By Thrugelmir 4th Dec 17, 10:07 PM
    • 56,255 Posts
    • 49,622 Thanks
    Thrugelmir
    • #2
    • 4th Dec 17, 10:07 PM
    • #2
    • 4th Dec 17, 10:07 PM
    Would suggest the interest only part. With only 12 years left on the mortgage term. You can target/monitor how much you've left to repay.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • getmore4less
    • By getmore4less 4th Dec 17, 10:50 PM
    • 30,841 Posts
    • 18,446 Thanks
    getmore4less
    • #3
    • 4th Dec 17, 10:50 PM
    • #3
    • 4th Dec 17, 10:50 PM
    what's your goal.

    if you target the repayment, if you get short of money your future payment could be lower



    lets do some numbers(rates can change)


    We have a £90k loan with two thirds on interest only and remainder on repayment. Our loan rate is 2% fixed for 5 years. Loan Term is 12 years

    £90k 12years 2% is £704pm

    current payments

    £60k 2% 12y £469
    £30k 2% 12y £50
    total £519

    you need £185pm extra to pay all of this off

    £300-400 is plenty

    if we say £300pm(£820total) for the next 5y starting now you will have £47,758 left and if you can get 2% for the next 7 year you need a payment of £610

    if you can make £400pm(£920 total) for the 5y your payment for the next 7@ 2% goes down to £530.
    Last edited by getmore4less; 05-12-2017 at 6:12 AM.
    • DropD
    • By DropD 5th Dec 17, 7:05 PM
    • 7 Posts
    • 3 Thanks
    DropD
    • #4
    • 5th Dec 17, 7:05 PM
    • #4
    • 5th Dec 17, 7:05 PM
    Thanks for replies. The main aim is just to clear the mortgage by the end of the current agreement.


    Hadn't considered how targeting the repayment could make things easier in future if money becomes short, thanks for taking time to explain.
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