Most feeble overpayment?

gallygirl

lowedb wrote:

Well we started small, about 5 years ago when we changed lender. We put in a bit here and a bit there, and then some bigger bits if I got a good chunk of overtime.

We were concerned about having money available for emergency purchases, so wanted to keep savings, but when I thought about it we did it this way.

We built up a big overpayment fund so we weren't paying interest, but we still 'owed' the bank the money, it's just they owed the same amount to us. This saved us more interest than we would have earned on the savings and of course no tax because we never actually got the interest. We then stopped overpaying, but kept a really small mortgage (£600) for a few months while we put all the money we didn't have to pay in interest to them, into savings (ISAs naturally). Then because we couldn't actually pay off for a few months (early repayment charge) we transferred the overpayment to a capital repayment, and left a tiny mortgage. And today we paid it off, six years early. All for starting from a few pounds here and there.

My OH didn't believe it, even after producing excel graphs every few months to show how we were doing. She even pinned it up as an incentive to throw everything at it. So it makes sense to me to put any savings into your overpayment fund (ISAs excepted, probably) so long as you can get them out anytime you need them.

Needless to say, we are celebrating with a nice bottle of Champagne (half price of course!)

Well done lowedb! You've inspired me!!!! 86P GOING IN TOMORROW.....:rolleyes: Think it will really make a difference.....

Jays

lowedb wrote:

Well we started small, about 5 years ago when we changed lender. We put in a bit here and a bit there, and then some bigger bits if I got a good chunk of overtime.

We were concerned about having money available for emergency purchases, so wanted to keep savings, but when I thought about it we did it this way.

We built up a big overpayment fund so we weren't paying interest, but we still 'owed' the bank the money, it's just they owed the same amount to us. This saved us more interest than we would have earned on the savings and of course no tax because we never actually got the interest. We then stopped overpaying, but kept a really small mortgage (£600) for a few months while we put all the money we didn't have to pay in interest to them, into savings (ISAs naturally). Then because we couldn't actually pay off for a few months (early repayment charge) we transferred the overpayment to a capital repayment, and left a tiny mortgage. And today we paid it off, six years early. All for starting from a few pounds here and there.

My OH didn't believe it, even after producing excel graphs every few months to show how we were doing. She even pinned it up as an incentive to throw everything at it. So it makes sense to me to put any savings into your overpayment fund (ISAs excepted, probably) so long as you can get them out anytime you need them.

Needless to say, we are celebrating with a nice bottle of Champagne (half price of course!)

Well done lowedb, from me too,

You've made me think about our offset mortgage again, we have been overpaying and offsetting against savings and current account balances.

It didn't occur to me to add to the savings rather than over paying the mortgage, in that way we can stop the interest payments altogether, leaving extra to overpay into the mortgage once the savings = mortgage. That puts a complete spin on overpaying the mortgage.

Many, many thanks
Jays

Bootsaholic_2

This all sounds great to me but I am on an endowment mortgage, can you still overpay on this?

halloweenqueen_2

If you have your paperwork to hand it may tell you in there, I have no experience of endowment mortgages though, I'm sure someone will come along and tell you!!

Redbedhead

Thank you for this post.

At the beginning of the month I decided to follow the example of someone on here who transfers the odd pennies in their current account (to ensure the balance is always round pounds) against their mortgage. I decided to do the same and also put in the interest I get on my current account as I don't budget to have that.

I looked at my mortgage account this month and I have transferred nearly £20 - and it has been painless!!

This is only to my small mortgage account (a remortgage for a new kitchen and some building work) as my main overpayments go to the main account. However, seeing the benefits is wonderful!

Thanks again

Thriftylady

When I used to work for a mortgage company, we wouldn't have accepted small adhoc payments like this, they had to be at least £1000 !

having said that, we would have allowed customers to increase their monthly DD by tiny amounts - I did it myself, I pay a whopping £4.60 extra each month (it brings the total amount up to a nice round figure)....

Thriftylady

Bootsaholic wrote:

This all sounds great to me but I am on an endowment mortgage, can you still overpay on this?

anything you pay off any mortgage will reduce the amount of interest charged in the long run, so if your lender will let you do it then why not. but some lenders won't recalculate your interest based on small overpayments, and if your interest isn't calculated daily then its an added complication....

the thing to bear in mind with an interest only mortgage though is that monthly repayments are the same regardless of the term, this is something which confuses a lot of people. (not suggesting that you personally are confused, but just thought I'd mention it!)

e.g. £100,000 over 10 years has exactly the same monthly repayment as £100,000 over 40 years. but obviously if you reduce the amount of capital owed, then the amount of interest chargeable will reduce too...

gallygirl

Wow - bit better this month £600 bonus from work, plus £11 shares divvie (1st one have ever had!).

2 months knocked off, now Jan 16. :j :j :j :j

mdeebee

ali007 wrote:

OK, £10 exactly left at end of week so paid in today, £6.63 interest saved.....:money: will take a while to get rich this way........

Can I ask a really thick question?

When you say "£6.63 interest saved", how do you work that out?

Thanks.

gallygirl

mdeebee wrote:

Can I ask a really thick question?

When you say "£6.63 interest saved", how do you work that out?

Thanks.

Have a spreadsheet on which I record mortgage, interest, op's etc. I can calculate mortgage free date on it, so compare interest I would have paid to interest I will now pay, if ypu see what I mean!