advice on overpayment with mortgage ending in may

avondale

I'm on a fixed rate mortgage which is at 4.39%, the fixed rate ends at the end of May 2009. I am able to make overpayments and want to know will it be worth my while in making one overpayment to the value of £10k.
Or should i wait until this term is up and make this overpayment with a better interest rate.
My reasons for doing this is that the bank rates are so poor at the moment that the interest i will get leaving it in an account would be minimal.
My intention being that my mortgage provider would hopefully reduce the length of my mortgage and not the repayment.

I hope this doesn't sound to dumb a question and advice would be appreciated

JMitchell_2

If it were me, I think I'd over pay now if there's no fees associated with the overpayment.

It will save you a bit of money until you remortgage and you'll still benefit from the better rate when it comes to remortgaging.

I suppose it depends whether there'd be any chance of you wanting to use that money for anything else in the mean time.

dimbo61

You need to call your lender and ask if they allow overpayments during the fixed rate period and how much each month/year.
If you owed say £100,000 at the beginning of this year ( on your statement ) and they allow 10% overpayment then you can pay the £10k off the mortgage in the morning and save paying interest on that £10k at 4.39%.
If no overpayments allowed then pay a lump sum off in MAY
Most good deals now have a large arrangemnt fee so keep some cash to pay that and dont add it onto the mortgage. GOOD LUCK

dimbo61

You tell the lender how long you want your mortgage to last and they tell you how much that will cost each month.
If you pay £10k off your mortgage and keep your payments the same you will be mortgage free much earlier and save thousands in interest.