Overpayment query - reduce term or monthly payment?

coldstreamalways

Mine is 35yrs too, how scary is that? I want to be retired in 35yrs!!! 35yrs =60 so I'm planning to be mortgage free at 40. I already have a pig!

Sunnyday

stevie_wonder wrote: »

I had an A&L fixed mortgage and they limited it to 10% of the total mortgage that you could overpay in a year, also you could only make one overpayment in January?

I have this type of mortgage at the moment and it`s fixed until June 2010, i`ve always been confused about what is best to do.
The first year i couldn`t afford to overpay anything but the second year i reduced the amount i paid per month and the second year i overpayed and had the term reduced.
This January i`ve no idea what to do at all so i`ll be following this thread with interest.
SD

will-in-estoril

Don't forget to use your ISA allowance, as long as the rate on your ISA is greater than the mortgage rate.

Skipton BS offers a fixed rate ISA paying 6.54% until December 2009, and accepts transfers in, so that you can build up a lump sum by then. A&L offers a window in January for mortgage overpayments, which is perfect timing to use the savings accrued.

EssexHebridean

Hi Rozzy - and welcome! Your 100% mortgage isn't a silly thing to do so long as you can cope with the payments. For what it's worth ours was 110% - we needed the extra as we were starting from scratch and had to buy furniture, appliances etc.....it was a mini-party when it went below the level we'd actually paid for the flat!

You've got totally the right idea now with getting the overpayments in. We're overpaying via simply increasing the monethly payments...the eventual effect will be to pay off quicker but as things stand at the moment the term remains the same. As and when we have to change deals (same as you - three years time) we'll almost certainly have to change lenders anyway - we're also with Northern Rock - so we can adjust the term then to take account of our previous overpayments. Northern Rock are really flexible at the moment too - I guess they don't have all that much choice really - if people are volunteering to give them money they're going to accept it, aren't they!!

Good luck!