tart - overpay into mortgage 27 November 2004 at 11:31PM in Mortgages & Endowments 9 replies 1.5K views

wallet_2

currently 19.5 years to go on tracker with nationwide.

if pay in £8.5k as overpayment i am told by n.w that repayments(mainly interest) drop by £60/month = £540 made on £8.5k in 9 months !!! isnt that bout 9% ?!!!

if i withdraw £8.5k next sep my payments revert to their current amount and the paid up date hasnt been extended.

those figs sound superb to me or have i missed somethin and should i push the cork back into champaz bottle

cloud_dog

Wow - the returns just keep getting better and better, perhaps you should post again in another week or two

As previous posters have explained you are missing out a lot in your calculations soooooooo, no you will not get a 9% return (12% APR). Also what about the interest you loose by not having £8.5k in a savings account.

You really need to factor these things in.

cloud_dog

wallet_2

OH I'M NOT GETTIN THIS - FIGURES ARE APRROX BUT YOU TELL ME WHICH SAVINGS A/C WILL GIVE ME £540 INTO MY BACK POCKET NET, FROM £8.5K INVESTED FOR 9 MONTHS

TA

Robert_Sterling_3

Many more happy returns CeeBee.

Robert_Sterling_3

OH I'M NOT GETTIN THIS -  FIGURES ARE APRROX BUT YOU TELL ME WHICH SAVINGS A/C WILL GIVE ME £540 INTO MY BACK POCKET NET, FROM £8.5K INVESTED FOR 9 MONTHS
TA

Which pocket it goes in is not relevant but the answer to the question is almost certainly NONE.

cloud_dog

OH I'M NOT GETTIN THIS -  FIGURES ARE APRROX BUT YOU TELL ME WHICH SAVINGS A/C WILL GIVE ME £540 INTO MY BACK POCKET NET, FROM £8.5K INVESTED FOR 9 MONTHS

TA

CB, all we're saying is that we think your figures are not absolutely accurate / do not take into consideration the whole picture therefore, you will not really get a 9% return over 8 months (12% APR). You need to remember you originally posted asking for people to confirm your numbers as you could't beleive it.

If you are happy that the numbers are good then go ahead, enjoy, I'm not here to rain on your parade.

cloud_dog

DavidLaGuardia

Things are being overcomplicated here;

If you overpay your mortgage, the effective savings rate is the same for the mortgage.

So if the mortgage is 5%, it's a bit like getting a net rate from a savings account of the same.

That isn't at all bad as 5% is equivalent to 6.25% for a basic rate payer and 8.33% fo a 40% payer. No sterling savings account would pay this!

culpepper

dont know how it works for your mortgage lender but ours charges an early repayment fee if we pay more than 10% above the normal yearly amount agreed.So if you pay the whole thing as a lump sum you could end up paying them money for the privaledge.We are paying 12k into ours as it is reverting from endowment to repayment and it is going to cost us about £200

wallet_2

i'm still lookin in on my debate - and thanks for contributions so far - maybe i will only know in sept if and when i need to withdraw. but i have written letter from nationwide stating that my repayments will revert to todays amount if and when i withdraw the £8.5k and of course the period is unchanged so again i see that i will profit by approx £60 x 9 months (9 months of reduced repayments on tracker)

obviously if rates go up as i guess they may , things will be different.

wallet_2

culpepper - mine is tracker interest and capital coming to end of its 3 yrs and therefore it will only cost me about £21 penalty.

endowment i guess is much more problematic to work out cos of the gambled bit .