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overpaying on an interst only mortgage
mae
Posts: 1,516 Forumite
This is probably a stupid question but if I overpay on an interest only mortgage is it overpaying the interest only or is it reducing my mortgage amount? I am about to remortgage with Nationwide to an interest only 5.45% tracker for 2yrs (tied in for the 2yrs too) and was told I can over pay by up to £500 per month? I am borrowing £107000? I would be grateful for any help as I am obviusly confused sorry...
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Comments
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Any amount you overpay by will reduce the amount of capital owed, and will thus save you money on future interest repayments.
A useful, easy to use tool is the Egg mortgage calculator. Stick the details into the page and it will show you the effect of mortage overpayments in terms of money saved, and years of mortgage repayments saved too."One day I realised that when you are lying in your grave, it's no good saying, "I was too shy, too frightened."
Because by then you've blown your chances. That's it."0 -
Hi,
I'm guessing it's a typo and you mean 4.54%... as Nationwide charges interest on a daily basis any overpayment you make will reduce the outstanding balance.
P.S oops looks like we crossed posts
Your monthly payment would stay the same but the interest cost would be slightly lower so your normal monthly payment would start to build in an automatic overpayment.I am a Mortgage AdviserYou should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Yes sorry you're right it is 4.54% and thankyou both for your replies and making it clear to me I think I'll go ahead with this deal it seems about the best I've seen. Thanks0
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Yes sorry you're right it is 4.54% and thankyou both for your replies and making it clear to me I think I'll go ahead with this deal it seems about the best I've seen. Thanks0
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