In a muddle

eco_farmer

hi there,
have been an avid lurker on this site for sometime now and have learnt loads and have put much of what i have learnt into practice. So now we find ourselfs in the brilliant position of being able to overpay our mortgage:j .Our only problem is that our mortgage provider charges £55 per extra transaction. So should we save up the over payments and pay in one lump sum or pay our bugeted lump sum for the year up front from our O/D and pay back the overdraft?OR in a third option should we shorten the term of the loan?

currently our loan has 31yrs left to run and the interest rate is 2% over base.Our home has a section 106 agreement on it so changing our loan provider would be v difficult.

many thanks in advance
eco

crazyhazy

I would save the money in a high interest account/cash isa and pay it off once a year or when it gets to a certain amount. Which lender is it? £55 seems an awful lot to charge for making an overpayment! I don't think paying it upfront using an overdraft is wise cos you'll then have to pay the overdraft charges and what happens it your situation changes and you can't afford the overpayment one month, you wouldn't be able to get it back.