Overpaying Mortgage ...

Hi there,

We have just managed to reduce our £107K IO mortgage to £70K by paying off the difference using some redundancy money. The next stage is to overpay but I'm a bit confused - is it best to overpay on a monthly basis or save up to pay off a lump sum annually? :confused:

Our mortgage allows unlimited overpayments and the interest rate is 3.49%

Any suggestions welcome :j

Replies

  • PeelerfartPeelerfart Forumite
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    If you can get a better savings rate then 3.49% then save it there and pay it off as a lump sum. It's also available if you need it in the interim for something else.
    Space available for rent
  • johng_ukjohng_uk Forumite
    2K Posts
    I think that the best paying ISA around atm is Barclay's (3.61%) and you can find 'bonds' paying upto 4.3% (with tie-ins for the cash etc).

    If it was me, I would overpay as much of my mortgage as I could at this moment in time. This would reduce how much you owe, and future-proof you for when interest rates eventually rise again and you look to re-mortgage.

    Also as peeler says, if you needed access to the cash it's there. Always a good thing in todays economic climate.
    John :beer:

    Life's too short.........
  • Ali660Ali660 Forumite
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    Part of the Furniture 100 Posts Combo Breaker
    Thanks for the advice guys, I'm convinced it's the right thing to do at the mo. We've got ISAs in place and a little put by in savings accounts so the mortgage is going to get it next!

    Ali x
  • johng_ukjohng_uk Forumite
    2K Posts
    Ali660 wrote: »
    Thanks for the advice guys, I'm convinced it's the right thing to do at the mo. We've got ISAs in place and a little put by in savings accounts so the mortgage is going to get it next!

    Ali x

    :p

    You know it makes sense!
    John :beer:

    Life's too short.........
  • PeelerfartPeelerfart Forumite
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    johng_uk wrote: »
    :p

    You know it makes sense!


    He's right you know
    Space available for rent
  • Lynn11Lynn11 Forumite
    674 Posts
    I manage to save about £400 per month in different savings accounts as well as paying an extra £200-£250 per month overpayment to the mortgage, so that we have money there if hubbie jobs goes and we can survive for at least 8-9mths but I am also happy to know that I am also paying off some of the mortgage every month. Good luck on your MFW journey.
    MFIT T2 Challenge - No 46
    Overpayments 2006-2009 = £11985; 2010 = £6170, 2011 = £5570, 2012 = £1290
  • johng_ukjohng_uk Forumite
    2K Posts
    Peelerfart wrote: »
    He's right you know

    Why thank you - Don't hear that often enough!!

    :p
    John :beer:

    Life's too short.........
  • dimbo61dimbo61 Forumite
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    You could also put £250 a month ( up to ! ) into a Barclays 6% regular saver for the next 12 months and use that plus the interest to pay a lump sum off the mortgage.
    Better still if you are a non tax payer
    HSBC have a 8% RS but you need to bank with them.
    GOOD LUCK
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