Overpayment Confusion??

apennysaved_4

HI

I'm thinking of overpaying on my mortgage but have a question - can anyone help?

If I overpay by £160 I save 7 years and about £16,000. However, if I just put £160 a month under my mattress for the same shortened period (13 years) I will have nearly £25,000. Have I made an error in the calculations?

Details - mortgage £75011, 4.89%, 20 years to go.

Thanks - I'm pulling my hair out as conventional wisdom says that overpaying must save you money.

loki13

You will save money overpaying - approx £16000 in interest. If you don't overpay, your total repayments would be £118000, if you overpay, total repayments would be about £102000. This is assuming your interest rate stays the same for the full 20 or 13 yeears (if you overpay.

dpc197

apennysaved wrote: »

HI
However, if I just put £160 a month under my mattress for the same shortened period (13 years) I will have nearly £25,000.

....and a mortgage balance of 35k ish, whereas by overpaying you'd be mortgage free :j

apennysaved_4

dpc197 wrote: »

....and a mortgage balance of 35k ish, whereas by overpaying you'd be mortgage free :j

Yes - a very good point. Thanks!