Overpaying Repayment v. Overpaying Int. Only

CLAPTON

nomey wrote: »

Is it not possible to get an interest only mortgage and the overpayments come off the capital with the interest recalculated monthly?

yes of course it is.

kriss_boy

CLAPTON wrote: »

yes of course it is.

Yup lloyds tsb said I can overpay as much as I like but they wouldnt recalculate the interest until the end of the year or something along those lines.

Which isnt too big a deal.

Cannon_Fodder

Say you overpay by £500 a month on a 5% deal...£6,000...doesn't get recalculated until year end, is £150 extra interest...

Each year, for 25 years, is £3,750 extra interest.

Not to be sniffed at?

kriss_boy

Point taken but short term, having the security of knowing we can revert back to IO with one phone call is big plus.

Cozworth806

Cannon_Fodder wrote: »

Say you overpay by £500 a month on a 5% deal...£6,000...doesn't get recalculated until year end, is £150 extra interest...

Each year, for 25 years, is £3,750 extra interest.

Not to be sniffed at?

But it isn't. With C&G (All I know about) they may not look at overpayments till the year end so the interest payments made during the year stay the same, however the overpayments and reduced interest cost are factored into the amounts paid off the mortgage so you are no worse off and indeed will have increased the O/P during the year without increasing the payments as I believe the interest is calculated daily.