probably a silly question

pablo1827

Hi folks,I have a total mortgage of £26000 (£20000 int only,£6000 repayment)this mortgage is with NW and runs until mar 2015.My monthly payments are £130 at 2.5%. I have been making £150 overpayments per mth for the last 6mths and hope to continue doing so. I have been delighted watching my repayment part come down but iam not so sure about what happens when the repayment only is paid off. So this is my probably silly question,do i just keep paying the mthly payments and overpayments and will this then come off my int only or do I have to change it to a repayment mort if I want to continue making overpayments. Thanks Pablo1827. PS if I keep paying £150 extra by how much can I reduce my term.

CluelessJock

Interest is not a fixed amount, but is calculated as the current %age of the amount owed. Although I think most mortgages are calculated on a daily basis you need to check how often the calc. is made. It used to be most were calculated annually and any overpayments would only be taken in to account at that time. Clearly there would be little value in overpaying monthly if this was the case.

My advice is to start with getting all the details of the mortgage, including how overpayments are treated.

dimbo61

THE interest only part of your mortgage is costing you £41.67 a month for £20,000 at 2.5%
Once you have paid off the repayment part you can start clearing the IO part.
How much is interest and how much overpayment depends on the interest rate you are then paying!
Good Luck on being MF

pablo1827

Thanks dimbo61.Thats good news that the interest only part was only costing me £41.67per mth.I can now crack on overpaying the repayment part then once thats done start wittling away the int only.I can see that the int only could come down fairly quickly if I stick with the overpayments.Thanks again.Pablo.