how to work out best overpayment

cheepskate_2

hi

I would appriciate any advice.

I have a mortgage, for £38000 over 11.2years @ 6.24(fixed 2.5 y)
I want to overpay, but dont really know best way and used egg calc. but it only does it for a few years.

Is paying into the overpayment £100 extra a month better or saving it up and paying the £1400 extra into the capital repayments each year.

Th adviser was very helpfull but overpayments is not my thing.

He says paying in for a year £100.00 would technically reduce it the first year to 10.9y and the capital repayment to 10.8 y.

To my untrained ye it looks like the capital one would be better but it doesn't seem right

Any advice appriciated, or any site that would work out combinations would be helpfull.

thanks

getmore4less

Overpay when you have the money the sooner the better.

You pay less interest(as long as they take the overpayment off the capital) by borrowing a lower amount for longer.

If yo can get more than 6.24% after tax on savings then save it

Part of the problem might be that £100pm is £1200py not £1400py

koexelek

If the lender charges the interest daily ( as most do) pay it off as often and soon as you can.

If the lenders charges the interest annually, put it into a savings account initially, then pay it off the mortgage in one lump sum just before the interest is calculated.

Rikki

Check the terms and conditions of your mortgage!

Some repayments you can only overpay by 10%, others charge each time you make a repayment. Interest only or repayment mortgage makes a difference as being on a fixed rate deal.
Mine will only accept overpayments by cheque. You really do need to check with your lender.

Moneysaver1_3

For the last few years I've been paying 10% overpayments which is allowed with my Derbyshire mortgage. If I want to pay more there is a premium charged. Is it still financially worthwhile idoing this if I can?

cheepskate_2

Hi Guys

Thanks for the advice.

I called the bank and he told me that if i overpay monthly then it does not go towards the mortgage but goes into an ofset fund and that at the end of my term is when the money can then be paid towards my mortgage thus reducing the term. I can at any time take this overpayment out of my bank as it is just held in the ofset .

If i put the money into this offset it reduces the amount of money i pay interest on.

This has now got me confused.

I thought when you overpay to your mortgage monthly that i is taken off the mortgage amount, and that is it gone you cannot get at it .

I am with co-op banking if it makes any difference

Anyone help

thanks

_dave__4

cheepskate wrote: »

Any advice appriciated, or any site that would work out combinations would be helpfull.

thanks

You could try this one:-

http://calc-calc-calc.net/

The following page has a few different mortgage calculators:-

http://calc-calc-calc.net/get/category/Money/

HTH!