Started Today

1964bloke

Well here we are. Been lurking for a while now and decided today to begin overpaying my mortgage. My circumstances are as follows....

£89000 to go over a term of 19 years, this is now reduced to a term of 15 years (and a few months) as I whacked in the full 10 percent (£8900)....

My fixed deal runs out 2015..... what do you all think could I be MF by the end of this term? (7 years)...... assuming I can keep up the annual overpayments...

regards

NY:money: :money: :money: :money: :money:

BARGAINHUNTER!

Hi and welcome aboad!

Are you intending to put in £8900 annually? Won't your mortgage allow you to make monthly overpayments?

And yes - im sure you will be able to do it! But beware - its addictive!

1964bloke

Well I dunno really.... I'd rather save up and whack it in each year.... Are there advantages in overpaying monthly compared to a yearly lump sum..... ?

moominyak

Yes, if your interest is calculated daily and not annually... the quicker you pay a lump off, the sooner you'll not be getting charged interest on that lump

And if you can put £8900 a year towards it, that's a sizeable lump each month!!

Welcome and good luck

PS Glad you reduced your font size a bit!

EssexHebridean

Well done for getting hold of it and making the decision to get the beast paid off. I'd agree with those who say if you are allowed to overpay on a monthly basis, then do so. If for no other reason than once it's paid in there, you can't get at it to spend on anything else! However you do it though you have your deadline in mind as an incentive - make sure you have your budget all worked out so you know exactly how much you can overpay and how much you can save elsewhere as a potential lump sum in case for whatver reason you don't have it cleared by the end of your fixed rate.....

Good luck!

BARGAINHUNTER!

There are some great spreadsheets on here that will show you the difference between overpaying monthly and overpaying once a year, provided your lender will allow you to do it. Its also easier once a month, I overpay by £200 a month, and I have changed my standing order to reflect this. So now I have set it up I don't need to worry, I can just sit back and watch the years drop off my mortgage! Thats why the spreadsheets are so great and why its really addictive!

Also, if you only overpay once a year you may be tempted to use this money for something else. Focusing on your goal on a monthly (or daily as some people do!) basis really helps focus your mind on what you are doing! It also helps if you have online banking and can see your mortgage balance online - I have an offset account online, and as well as committing to overpaying by £200 a month, I sometimes look at my current account (which is not offset as it is with another bank) and if I see that I have some spare cash in there I can transfer it electronically to my offset savings account, which ultimately reduces the amount of interest that I pay on my mortgage, which means that more of my £200 overpayment goes on overpaying the capital rather than the interest - if that makes sense! Im with IF, and I currently have a savings account and my ISA offset against my mortgage, my interest is calculated daily but charged monthly, and I only pay interest on the balance of the account (the amount left once they have taken away the amount in my ISA and savings account from my mortgage)

1964bloke

Oh yes somehow that font came out a bit large.. oh well...!

Well the thing is I felt that I wanted to get OP'ing underweigh (way?) ASAP and I was in the very lucky position to have a fat wodge of cash handy just to get the ball rolling. Maybe for year 2 and 3 and 4 and 5 and so on i'll be better off knocking it in monthly... My aim MF by 2015 when the current deal runs out anyway.....

setmefree2

Good Luck:T:T:T

StuartGMC

Assuming you've adhered to all the usual aspects of having 6-9months emergency funds, cash saved for planned work on the home (new bathroom etc) and you have pension etc in hand, then overpay as you indicate but as early as you can. Mortgage calculators can show the benefit directly and for an incentive you can collate the saving in interest each OP has made because it is not incurring interest for the duration of the mortgage.

Welcome, good luck and keep us posted.