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When to make an overpayment??
jexysbird
Posts: 97 Forumite
Is there a right time, to make an overpayment, with regards to interest? My mortgage comes out on 1st of each month. Should I make any overpayment on this day too? I have just been making OPs as and when I have a spare amount of money just so I don't spend it elsewhere.
Thanks
Thanks
MFW (as of 08/11/11) £7645.90
Aiming to be mortgage free by Dec 2012 :j
Sealed Pot Challenge #1628 - £16.000
Comments
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It depends on when your interest is calculated and applied. If the interest is calculated daily ad applied monthly, then the sooner you make the overpayment the quicker it will have an effect on the mortgage interest. Monthly calculated and monthly applied then its best to get it paid off just before the interest is calculated. If it is calculated annually (very few of these around) then save up all your overpayments in a high interest savings account and annually just before the interest calculation lump it off.
HTH0
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