overpayments won't come off until fixed rate ends!

plzhelpmesave!

Hi all

Am desparately trying to join you all in being a MFW - want it sooooo bad and am addicted to playing around with the overpayment calculators!

I am applying for jobs at the moment and our plan was to chuck most of my wages at the mortgage - we have £116,000 on a 25 year mortgage which we fixed for 10 years in march this year @ 5.39% with west bromwich. Have just spoken to them again, as we were finally going to set up an overpayment and i just wanted to check everything through with them.

Have just been told that any overpayments we make (can op by £999 a month) will not be applied to the account until the end of the fixed period - in ten years time!! So no point in overpaying then!! won't get to use a nice spreadsheet to see amount coming down each month - baaah!

Hubby's salary has increased by £100 a month so that was our start in OPing until i get a job. What should we do then with this - easy enough tos spend it, but we wanna OP the mortgage!

Anyhelp/advice appreciated pls. just to add i know we should just save it in an ISA as we have no savings either!

Welshlassie

That sounds very odd, I'd check your key facts doc and call to speak to someone else to check that. Its unusual for mortgages these days to work like that, occasionally recalculations happen annually, but in 10 years, especially as they allow overpayments.

If what they have told you is true then I'd stick the amount you intended to OP into ISA's initially and then high interest savings accounts. Think about using fixed rate bonds etc so you are less inclined to use the money.

If you have no savings then it would be beneficial if you had 3-6 months worth of income saved as fall back.

Once you have all this saved, chuck your OPs into a savings account specifically for using to lump of the mortgage when the OP ends. You can still join in with the MFW lot just count your savings are your OP and don't touch it until your fixed rate ends.

Best of luck and welcome.

plzhelpmesave!

thanks welshlassie. Hubby had said that was the situation after he spoke to someone a few months ago about OPing. I phoned today to doublecheck as we could now finally start OPing a bit, but got really demotivated at the idea of not affecting the capital amountt. Might pop into branch tomorrow and speak to someone there to double check with our paperwork.

dimbo61

if you are not allowed to overpay ( and it be counted !) then
set up 2 cash ISA,s each year.
If you could fill both ISA,s in 10 years you would have £72,000 plus interest and that plus the payments made during the 10 year fixed deal would ? give you the money to pay off your mortgage.
MF in ten years and no remortgage costs GOOD LUCK

Trying_to_be_good

Another thing to check is whether they'd allow you to change the term of the mortgage, and put more on repayment if some is interest only at the moment.

If you can reduce the term you will automatically be making bigger monthly payments, i.e. overpaying with immediate effect.

Similarly, if some (or all) of the mortgage is on interest-only at the moment, changing some (or all) to repayment would increase the monthly payment, having the same effect as overpaying but with immediate effect.