how much overpayment before i see an effect?

mrs_flipper

hi

After reading all your posts i decided to start a concerted effort to overpay my mortgage. I have £64000 left due to end April 2026. I started the beginning of May and have so for overpaid by £150.

How much will I need to overpay before i see the term reducing?

Thanks in advance

kerry

P.s. my mortgage is with Nationwide and I can overpay £500 a month, i have told them i want to reduce term not monthly payments

MORPH3US

Every overpayment you make will see the term reduce, at the moment, the £150 will not have a great deal of effect but if you keep overpaying £150 (or more if possible) every month then 10 months = £1500 overpaid (which will probably be 3 months you have saved (not taking into account interest payments too)!!

M

mrs_flipper

thanks

i am going to make another £100 overpayment this week. Just want to see it start moving in the right direction to keep me motivated.

Martinslovechild

Mrs Flipper,

Check out the Egg Mortgage Calculator. Enter your details and - hey presto!

Looking at your figures, a 20 year repayment mortgage of £64,000 (based on a rate of 4.99%) would reduce the term by 7 years 5 months if you were to overpay £150 per month for the duration of the mortgage (12 years 7 months).

Plus - you would save £15,000 in interest!!

By the way - if you could afford overpayments of £260 per month, then your mortgage term would halve to just 10 years and you would save £20,000 in interest. I recommend that you sit down with Martin's Budget Planner and work out what you can realistically afford each month.

Joe_Bloggs

@mrs flipper
Can you see your mortgage account online ? Did you request that your regular monthly repayments remain the same despite your overpayments. They can alternatively treat overpayments so that they reduce the regular payment and keep the term the same. Since the Nationwide will credit an overpayment within 1 working day you can see the effect in one day. Also the daily interest will be measurably less than before. This would be by 1.3p per day at my rate of interest in the case of a £100 overpayment. Overtime these overpayments eat into the capital reducing the interest charged.
The bonus with the Nationwide is that you don't have to stick to a soul destroying schedule but can miss overpayments and make up lost ground when you have the money. I like to make two overpayments per month. That is when I get paid and then later when all the bills and credit cards have been paid off and there is no other pressing need for the money.

Many other borrowers are forced to save up in interest taxable accounts before they can make a one off annual payment.
J_B.